Question
Highlight Company is considering the purchase of the following computer equipment, which is considered 5-year property for tax purposes: Acquisition cost $420,000 Annual cash flow
Highlight Company is considering the purchase of the following computer equipment, which is considered 5-year property for tax purposes:
| Acquisition cost | $420,000 |
| Annual cash flow | $140,000 |
| Annual operating costs | $ 31,000 |
| Expected salvage value | $ 0 |
| Cost of capital | 11% |
| Tax rate | 35% |
Highlight Company plans to use Modified accelerated cost recovery system (MACRS) and keep the computer equipment for seven years.What would the MACRS deduction in Year 1 be? (Round your answer to the nearest dollar.)
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Advanced Audit And Assurance Study Text
Authors: KAPLAN
1st Edition
178740398X, 978-1787403987
