The Don'tMissSnow Company is purchasing some new research equipment today for $100,000. For depreciation purposes, it falls into the 3-year MACRS class. So depreciation rates are 33%, 45%, 15%, and 7%, respectively for years 1 through 4 of the asset's life. The company's tax rate is 40%. SHOW ALL WORK-AS IF IT WERE HAND WRITTEN FOR FULL CREDIT-NO CHARTS.
a) If the asset is sold for $20,000 at the end of year 1, what will be the net cash flow on the sale?
b) If the asset is sold for $20,000 at the end of year 4, what will be the net cash flow on the sale?