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Corporate Tax Rate Schedule

Tax calculationRounded Depreciation Percentages by Recovery Year Using MACRS for

First Four Property Classes

These percentages have been rounded to the nearest whole percent to simplify calculations while

retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual

unrounded percentages or directly apply double$-$declining balance $(200\%)$ depreciation using the half$-$year

convention. More info

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Corporate Tax Rate Schedule

Tax calculation MACRS depreciation expense and accounting cash flow Pavlovich Instruments, Inc., a maker of precision telescopes, expects to report pretax income of $$437,000$ this year. The company's financial manager is considering the timing of

a purchase of new computerized lens grinders. The grinders will have an installed cost of $$78,200$ and a cost recovery period of $5$ years. They will be depreciated using the MACRS schedule

Corporate tax rates are given

a$.$ If the firm purchases the grinders before year$-$end, what depreciation expense will it be able to claim this year?

b$.$ If the firm reduces its reported income by the amount of the depreciation expense calculated in part a$,$ what tax savings will result?

a$.$ The depreciation expense they will be able to claim this year is $

$($Round to the nearest dollar.$)$