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

$296,000.

a. What is the book value of the equipment?

b. If Jones sells the equipment today for

$179,000

and its tax rate is

35%,

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.

a. What is the book value of the equipment?

The book value of the equipment after the third year is

$nothing