St. Johns Paper has purchased equipment that has a depreciable cost of $1 million. The equipment will be depreciated using a 5-year MACRS schedule. If the company sells the equipment at the end of two years for $600,000, then how much in TAXES will be owed as a result of the sale? Assume a TAX RATE = .40

		There are no tax consequences.
		The company would have to pay $33,000 in taxes.
		The company would have to pay $48,000 in taxes.
		The company would receive a tax credit of $124,000, i.e., taxes are -$124,000.
		The company would have to pay $54,000 in taxes.