Research and experimental equipment is purchased for $100,000. The equipment will be depreciated using MACRS. a. In which MACRS GDS property class is this asset classified?

b. How much is the depreciation deduction for the first year?

c. CALCULATE the taxable income for the first year, if the company generated $400,000 in income from the equipment. The company has ordinary expenses of $10,000 and depreciation expense as calculated in part b.

d. what is the combined federal and state tax for a state where the state tax rate is 8%.

e. CALCULATE how much the company has to pay in combined federal and state taxes at the end of the first year. The state incremental tax is 8%.

f.CALCULATE how much is the first year's after tax income .

Fill in the blanks:

a.Property class: (Answer) .

b. The depreciation deduction is: $ (Answer) .

c. Taxable Income = $ (Answer) .

d. Federal and State Tax combined ( Answer) % (to two decimal places).

e. Taxes due= $ (Answer) .

f. After-tax income = $ (Answer)