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Business, 24.04.2020 00:55 astra

Donata Company purchased equipment for $30,000 in December 20x1. The equipment is expected to generate $10,000 per year of additional revenue and incur $2,000 per year of additional cash expenses, beginning in 20x2. Under MACRS, depreciation in 20x2 will be $3,000. If the firm's income tax rate is 40%, the after-tax cash flow in 20x2 would be:

a. $3,200.
b. $3,600.
c. $4,800.
d. $6,000.
e. None of the other answers are correct.

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