Maurer Corporation is considering a capital budgeting project that would involve investing $236,000 in equipment with an estimated useful life of 4 years and no salvage value at the end of the useful life. Annual incremental sales from the project would be $640,000 and the annual incremental cash operating expenses would be $494,000. A one-time renovation expense of $58,000 would be required in year 3. The companys income tax rate is 35%.

The company uses straight-line depreciation on all equipment.

The income tax expense in year 3 is:

Multiple Choice

$30,450

$20,300

$10,150

$51,100