Before Tax Cash Flows for years 1 through 5 10,000 15,000 18,000 16,000 12,000 45,000 Cost Basis of new Equipment t = 0 Tax Rate .25 Labor Rate 25 dollars/hr Salvage Value of Equipment 12,000 Expected duration of equipment 6 years MACRS property class 5 years For internal use of a company Use Straight Line Depreciation (6 years) to determine the Taxable income in Year 4 12,666 8450 O 11100 O 10500 9666