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Abbott placed into service a flexible manufacturing cell costing $800,000 early this year for production of their analytical testing equipment. Gross income due to the
Abbott placed into service a flexible manufacturing cell costing $800,000 early this year for production of their analytical testing equipment. Gross income due to the cell is expected to be $710,000 with deductible expenses of $515,000. Depreciation is based on MACRS-GDS, and the cell is in the 7-year property class, calling for a depreciation percentage of 14.29%, or $114,320, in the 1 st year Half of the cell cost is financed at 11% with principal paid back in equal amounts over 5 years. The 1st year's interest is therefore $44,000, while the principal payment is $80,000. a. Determine the taxable income for the 1st year. \$ b. Determine the tax paid due to the cell during the 1st year using a 25% marginal tax rate. $ c. Determine the after-tax cash flow for the 1st year. $
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