Maris Corporation put into service $100,000 of equipment that qualifies for its state’s 10 percent research credit. To the extent that the credit is claimed, no cost recovery deductions are allowed. Maris is subject to a 14 percent cost of capital. If the credit were not claimed, the property would qualify for cost recovery deductions using a three-year life, straight line with no salvage value, and a half-year convention. The state’s flat income tax rate is as follows.

1.

a. 2 percent 2.

b. 4 percent 3.

c. 8 percent