Book value and taxes on sale of assets

Troy Industries purchased a new machine 3 years ago for $80,000. It is being depcreciated under MACRS with a 5-year recovery period using the percentages given in Table 4.2 on page 120. Assume a 40% tax rate.

a. What is the book value of the machine?

b. Calculate the firm's tax liability if it sold the machine for each of the following amounts: $100,000; $56,000; $23,200; and $15,000.

Table 4.2

Table 4.2

Recovery Year	5 years
1	20%
2	32
3	19
4	12
5	12
6	5