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Posted on Aug 01, 2024

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 $178,000 and its tax rate is 25%, what is the after-tax cash flow from selling it?

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

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