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Gerdin Inc. just purchased a piece of new equipment at a cost of $230,000. This equipment belongs to the MACRS 7-year depreciation class. The associated

Gerdin Inc. just purchased a piece of new equipment at a cost of $230,000. This equipment belongs to the MACRS 7-year depreciation class. The associated percentages for different depreciation classes are presented in the following table. The company plan to sell the equipment at the end of year 4 for $80,000. The company's marginal tax rate is 30%. Find out the incremental cash flow related to this sales at the end of year 4.

year

3-year

5-year

7-year

1

33.33%

20.00%

14.29%

2

44.45%

32.00%

24.49%

3

14.81%

19.20%

17.49%

4

7.41%

11.52%

12.49%

5

11.52%

8.93%

6

5.76%

8.92%

7

8.93%

8

4.46%

A.$77,555.6

B.$80,000

C.$71,852

D.$8,148

E.$2,444.4

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