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A company purchase a piece of manufacturing equipment for a rental

purpose. The expected income is $10,000 the first year and increases $1,000 every year. thereafter. Its useful life is 5 years. Expenses are estimated to be $600 anually. if the purchase price is $75,000 and there is a salvage value of $25,000. The tax rate is 40% and the method of depreciation utilize by the company is the MACRS method. What is the after cash flow of this investment in year.
a.$10,986
b.$9,744
c.$3,760
d.$9,096

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Subject: Business, Economics

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