First cost of equipment - $150,000 Market value at the end of year 6-$30,000 MACRS depreciation is used. The equipment is a 5-year property. Combined income-tax rate for the company 35% Year 10 1 2 3 4 5 6 BT-CF in $ -150K 60K 63K 66K 69K 72K 75K O&M 10K 13K 16K 19K 22K 25K Expenses Reference: Case Study 12 The tax on depreciation recapture in year 6 is equal to O $6,000 $3,000 $10,500 $10,000