Van Meter Company is considering the purchase of the following computer equipment, which is considered 5-year property for tax purposes:
Acquisition cost $500,000
Annual cash flow $180,000
Annual operating costs $30,000
Expected salvage value $-0-
Cost of capital 12%
Tax rate 40%
Van Meter plans to use MACRS and keep the production equipment for seven years. (Round amounts to dollars.)
The MACRS deduction in Year 2 would be
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