Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Jones Company has just completed the third year of a five - year MACRS recovery period for a piece of equipment it originally purchased
The Jones Company has just completed the third year of a fiveyear MACRS recovery period for a piece of equipment
it originally purchased for $
a What is the book value of the equipment?
b If Jones sells the equipment today for $ and its tax rate is what is the aftertax 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.
Note: Assume that the equipment is put into use in year and the new order will consume the remainder of
the machine's useful life.
a What is the book value of the equipment?
The book value of the equipment after the third year is $Round to the nearest dollar.
b If Jones sells the equipment today for $ and its tax rate is what is the aftertax cash flow from
selling it
The total aftertax proceeds from the sale are $Round to the nearest dollar.
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. Select the best choice below.
A Yes, the cost of taking the order is the extra depreciation on the machine.
B Yes, the cost of taking the order is the lost aftertax cash flow of $ from selling the machine.
C Yes, the cost of taking the order is the lost $ in book value.
D No Jones already owns the machine, so there is no cost to using it for the order.
I NEED THIS ANSWERED ASAP!!! PLEASE!! I WILL UPVOTE
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started