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MACRS depreciation expense and accounting cash flow Pavlovich Instruments, Inc., a maker of precision telescopes, expects to report pretax income of $431,000 this year. The

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MACRS depreciation expense and accounting cash flow Pavlovich Instruments, Inc., a maker of precision telescopes, expects to report pretax income of $431,000 this year. The company's financial Question list K manager is considering the timing of a purchase of new computerized lens grinders. The grinders will have an installed cost of $75,600 and a cost recovery period of 5 years. They will be depreciated using the MACRS schedule . Corporate tax rates are given i a. If the firm purchases the grinders before year-end, what depreciation expense will it be able to claim this year? Question 2 b. If the firm reduces its reported income by the amount of the depreciation expense calculated in part a, what tax savings will result? Question 3 a. The depreciation expense they will be able to claim this year is $ . (Round to the nearest dollar.) b. The tax savings will be $|(Round to the nearest dollar) O Question 4 X More info More info (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet) (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Corporate Tax Rate Schedule Percentage by recovery year" Tax calculation Recovery year 3 years 5 years 7 years 10 years Range of taxable income Base tax (Marginal rate x Amount over base bracket) 33% 20% 14% 10% $0 to $50,000 $0 (15% x amount over $0) 45% 32% 25% 18% 50,000 to 75,000 7,500 (25% x amount over 50,000) 15% 19% 18% 14% 75,000 to 100,000 13,750 (34% x amount over 75,000) 7% 12% 12% 12% 100,000 to 335,000 22,250 x amount over 100,000) 12% 9% 9% (39% 335,000 to 10,000,000 113,900 (34% x amount over 335,000) 5% 9% 8% 10,000,000 to 15,000,000 3,400,000 (35% x amount over 10,000,000) 9% 7% 15,000,000 to 18,333,333 6% 5,150,000 (38% x amount over 15,000,000) 4% Over 18,333,333 6,416,667 (35% x amount over 18,333,333) 6% 6% 4%

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