Your company is contemplating the purchase of a large stamping machine. The machine will cost $161,000. With additional transportation and installation costs of $5,000 and $12,000, respectively, the cost basis for depreciation purposes is $178,000. Its MV at the end of five years is estimated as $39,000. The IRS has assured you that this machine will fall under a three year MACRS class life category. The justifications for this machine include $39,000 savings per year in labor and $26,000 savings per year in reduced materials. The before-tax MARR is 25% per year, and the effective income tax rate is 50%. Assume the stamping machine will be used for only three years, owing to the company's losing several government contracts. The MV at the end of year three is $50,000. What is the income tax owed at the end of year three owing to depreciation recapture (capital gain)?

Choose the correct answer below.

A. The income tax owed at the end of year three is $11,815.

B. The income tax owed at the end of year three is $24,000.

C. The income tax owed at the end of year three is $36,810.

D. The income tax owed at the end of year three is $23,629.

E. The income tax owed at the end of year three is $18,405.

The answer is A. Can you please show the steps to solve this in Excel?