What is the effective tax rate

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The acme company has a new product line that will be running for only 4 years. They bought a lathe two years ago when the product line began for $160,000. it is begining as a 3-year property according to the federal government . This lathe generates $98,000 a year in gross income and costs $2,000 a year to operate. Acme is considering selling the old lathe for $200,000 at the end of this year (year 2) and replacing it with a new lathe that would be purchased in year 2 and put into services in year 3. the new lathe would cost $180,000 to buy a,, cost $4,000 per year to operate and generate $160,000 of gross income each year beginning in year 3. this lathe is also a 3-year property, and would be depreciated as such for federal taxation purpose. this lathe would be sold in year 4 for $1000,00. State taxes are 10% and federal taxes are 35%.

What is the effective tax rate?

is the depreciation charge for year 3?

what is CFAT for year 2?

Reference no: EM131464412

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