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A distribution center purchased an equipment for $100,000 and has depreciated the equipment using the MACRS depreciation schedule with as a 7-year property. The operating

A distribution center purchased an equipment for $100,000 and has depreciated the equipment using the MACRS depreciation schedule with as a 7-year property. The operating income in year 2 was $200,000 and the expenses were $87,000. If the company is in the 40% income tax bracket, determine the after-tax cash flow in year 2 The tax in year 2 is equal to __________________.

Answers: A.

$40,00

B.

$35,404

C.

$24,490

D.

None of these

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