Your company is considering purchasing a new machine. An investment of $200,000 will produce an initial annual benefit of $45,000, but the benefits are expected to decline by $2,500 per year, making second-year benefits $42,500, third-year benefits $40,000, and so forth. Your firm uses straight-line depreciation, an 8-year useful life and no salvage value at the end of the 8 years. The tax rate is 42%.

Part A: Identify the correct formula to calculate the annual Taxable Income of a scenario similar to the one above.

A:Taxable Income = Before-Tax Cash Flow - Calculated Depreciation

B: Taxable Income = Before-Tax Cash Flow + Calculated Depreciation

C:Taxable Income = Before-Tax Cash Flow * Tax Rate

D: Taxable Income = Before-Tax Cash Flow / Tax Rate

Question 3 Part B: Identify the correct formula to calculate the annual After-Tax Cash Flow (ATCF) of a scenario similar to the one above.

Group of answer choices

ATCF = Before-Tax Cash Flow + Taxes

ATCF = Before-Tax Cash Flow - Taxes

ATCF = Taxable Income - Taxes

ATCF = Taxable Income + Taxes

Question 3 Part C: Complete the following table to show the schedule of cash flows for the life of the machine. Enter your answers in the form 1234 (enter o for blank table cells). NO DECIMALS Year Before Tax Cash Flow (enter either the number with no decimals, or O if blank) SL Depreciation (enter either the number with no decimals, or O if blank) Taxable Income (enter either the number with no decimals, or O if blank) Income Taxes (enter either the number After Tax Cash Flow (enter either the with no decimals, or O if blank) number with no decimals, or O if blank) 0 8