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Problem:

The Maximum Corporation has just completed the second year of a three-year MACRS recovery period for a piece of equipment it originally purchased for $500,000. Three-year MACRS schedule is as below.

	Year 0	Year 1	Year 2	Year 3
MACRS Schedule:	33.33%	44.45%	14.81%	7.41%

Required:

Question 1: What is the book value of the equipment?

Question 2: If Maximum Corp sells the equipment today for $45,000 and its tax rate is 30%, what is the after-tax cash flow from selling it?

Note: Provide thorough explanation of the given question.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91173709

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