Determine the taxable income

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Reference no: EM13186127

A small business that has taxable income of less that $50k purchases a machine for $10k. The machine yields an annual benefit of $5k over its 5-year life. Is the after-tax rate of return for this item closer to 5% or 12%? Assume a straight-line depreciation.

Taxable Income = Gross income - expenditures - depreciation

Corporate Income tax = 15% over 0

Straight Line depreciation:

$d_{t} = \frac{1}{n}(B-S)$

Reference no: EM13186127

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