A company purchases an industrial laser for $150,000. The device has a useful life of four years and a salvage value (market value) at the end of those four years of $50,000. The before-tax cash flow is estimated to be $80,000 per year.

a. You, of course, suggested applying the three-year MACRS (GDS) method instead of the straight-line method. Given an effective tax rate of 20%, determine the depreciation schedule and the after-tax cash flow

b. Based on the MACRS depreciation schedule for this asset, if the industrial laser was sold for $100,000 in year two (consider year two to be the year 2 row in the table in Part (a), what will be the amount of gain (depreciation recapture) or loss on the disposal of the asset at the end of this year?