A piece of equipment purchased at a cost $25 000 generated new income of $80,000 per year, witha annual operating costs of $10,000. The equipment was depreciated using MACRS method as 7-year property. At the end of five years, the management decided to sell the equipment for a modest price of $75,000. The company pays taxes at an effective tax rate of 23%. Which of the following was closest to the amount of taxes the company paid in year 5?
A piece of equipment purchased at a cost $25 000 generated new income of $80,000 per year, witha annual operating costs of $10,000. The equipment was depreciated using MACRS method as 7-year property. At the end of five years, the management decided to sell the equipment for a modest price of $75,000. The company pays taxes at an effective tax rate of 23%. Which of the following was closest to the amount of taxes the company paid in year 5?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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