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You are analyzing the prospects of installing cost saving machinery.

July 20, 2020/in Feeds /by admin

You are analyzing the prospects of installing cost saving machinery. You have the following information:
Every year the machine generates costs savings (before taxes) of an amount $60,000.
The cost of the machinery is 160,000.
The machinery will be depreciated “straight line” for tax purposes over 5 years. That is the depreciation for tax purposes per year will be the price of the machinery divided by 5.
The machinery will occupy space that would otherwise have been rented for $10,000 a year (before taxes are deducted).
The tax rate is 36%.
What will be the increase in taxes per year from installing the machinery? (Your answer should be a positive number.)