Simon Machine Tools Company is considering purchasing a new set of machine tools. Without the project, the company expects taxable income of $350,000 each year over next 3 yrs With 3-yr project, purchase of tools at $50,000 is required. Equipment is MACRS class 3. Tools will be sold for $10,000 at end of project life. Project will bring additional revenue of $80,000 and incur additional operating costs of $20,000.
What are the additional taxable incomes from undertaking the project during each of yrs 1 through 3?
What are the additional income taxes during each of yrs 1 through 3?
Compute the gain taxes when the asset is disposed of at end of yr 3.