The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for

$300,000.

a. What is the book value of the equipment?

b. If Jones sells the equipment today for

$183,000

and its tax rate is

21%,

what is the after-tax cash flow from selling it?

c. Just before it is about to sell the equipment, Jones receives a new order. It can take the new order if it keeps the old equipment. Is there a cost to taking the order and if so, what is it? Explain. (Assume the new order will consume the remainder of the machine's useful life.)

Note:

Assume that the equipment is put into use in year 1.