Krugman Construction Company Is Considering the Purchase of a New

Essay

Krugman Construction Company is considering the purchase of a new crane at a cost of $600,000. If the new crane is purchased the old crane will sold. It was purchased 5 years ago at a cost of $450,000. To date, the company has taken $200,000 in depreciation on the old crane. Compute the cash flow that would be realized from selling the old crane under each of the following scenarios. Krugman's marginal tax rate is 30%.
a. The crane is sold for $200,000
b. The crane is sold for $250,000
c. The crane is sold for $300,000