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bachelor in business administration
Polytechnic State University Sanluis
Jan-2006 - Nov-2010
CPA
Polytechnic State University
Jan-2012 - Nov-2016
Professor
Harvard Square Academy (HS2)
Mar-2012 - Present
A small manufacturing company has an estimated annual taxable income of $195,000. Due to an increase in business, the company is considering purchasing a new machine that will generate additional (before-tax) annual revenue of $80,000 over the next five years. The new machine requires an investment of $100,000, which will be depreciated under the five-year MACRS method.
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(a) What is the increment in income tax caused by the purchase of the new machine in tax year 1?
(b) What is the incremental tax rate associated with the purchase of the new equipment in year 1?
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