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A special tool for the manufacture of finished plastic products (MACRS-GDS 3 year property) costs $116,000 and has a planned salvage value of $17,000 after

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A special tool for the manufacture of finished plastic products (MACRS-GDS 3 year property) costs $116,000 and has a planned salvage value of $17,000 after a useful life of 4 years. The tool generates a net savings of $34,000 per year. The total effective corporate tax rate is 27 percent. After three years, plans changed and the company sold the machine at the end of the year for $25,000. A partial view of the analysis is shown below. What is D, the CFAT of year 2? Year CFBT Depr. TI Tax CFAT PW of CFAT 0 $(116,000) $ (116,000) 1 $ 34,000 $ 38,663 $ (4,663) $ (1,259) $ 35,259 F 2. $ 34,000 $ 51,562 $(17,562) $ (4,742) D G 3 $ 59,000 A B C E H Where CFBT = Cash Flow Before Tax; Depr = Depreciation; TI = Taxable income; Tax = Tax; CFAT = Cash Flow After Tax; PWfCFAT = Present Worth of Cash Flow After Tax. Your

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