What is the amount of net income in year two

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Pique Corporation wants to purchase a new machine for $316,000. Management predicts that the machine can produce sales of $205,000 each year for the next 4 years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $88,000 per year. The firm uses straight-line depreciation with no residual value for all depreciable assets. Pique's combined income tax rate is 30%. Management requires a minimum after-tax rate of return of 11% on all investments.

Problem 1: What is the amount of net income (after taxes) in Year 2 of the investment? Round to the nearest whole number.

Reference no: EM132815527

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