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The Jones Company has just completed the third year of a five-year MACRS recovery period...

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Question

Finance

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 $185,000 and its tax rate is 21%, what is the after-tax cash flow from selling it?

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

Part 1

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.)

Part 2

b. If Jones sells the equipment today for $185,000 and its tax rate is 21%,what is the after-tax cash flow from selling it? The total after-tax proceeds from the sale will be $________

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