A company invested in a water treatment plant $550,000. The installation cost incurred were $250,000. The plant has a MACRS-GDS 7-year property class. The BT&LCF is $300,000 per year, and the comany's tax rate is 40%.

1. The company used the allowable depreciation deductions during the first year. The comany has decided to sell the asset during year 3, what is the depreciation allowance for year 1

a) 78595 b)114320 c)42870 d)121465

2. The company obtained a loan at 10% for the total investment to be paid in 4 equal principal payments plus interest every year. Fill the following ATCF table for year 1

BT&CF PPMT IPMT DWO SECTION 179 BV

3. Assume that the company used all depreciation allowances as calculated in problem 1 and 2, and sold the asset during year 3 for $150,000. What is the taxable income for year 3? fill only necessary information to calculate TI

BT&LCF SALVAGE PPMT IPMT DWO SECTION 179 TI BV