Answer Happy

Your company is contemplating the purchase of a large stamping machine. The machine will cost $179,000. With additional transportation and installation costs of $4,000 and $10,000, respectively, the cost basis for depreciation purposes is $193,000. Its MV at the end of five years is estimated as $35,000. The IRS has assured you that this machine will fall under a three year MACRS class life category. The justifications for this machine include $39,000 savings per year in labor and $24,000 savings per year in reduced materials. The before-tax MARR is 14% per year, and the effective income tax rate is 21%. Assume the stamping machine will be used for only three years, owing to the company's losing several government contracts. The MV at the end of year three is $50,000. What is the income tax owed at the end of year three owing to depreciation recapture (capital gain)?
GDS Recovery Rates (rk) Year 3-year Property Class 1234 2 0.3333 0.4445 0.1481 0.0741
O B. O A. The income tax owed at the end of year three is $26,000. The income tax owed at the end of year three is $4,495. The income tax owed at the end of year three is $7,497. The income tax owed at the end of year three is $21,407. O E. The income tax owed at the end of year three is $35,699. O C. O D.