Question

Modified ACRS Depreciation Allowances (Table 10.7) Year Three-Year Five-Year Seven-Year 1 33.33% 20.00% 14.29% 2 44.45...

Modified ACRS Depreciation Allowances (Table 10.7)
Year Three-Year Five-Year Seven-Year
1 33.33% 20.00% 14.29%
2 44.45 32.00 24.49
3 14.81 19.20 17.49
4 7.41 11.52 12.49
5 11.52 8.93
6 5.76 8.92
7 8.93
8 4.46

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Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $588209 is estimated to result in $187762 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will have a salvage value at the end of the project of $98015. The shop's tax rate is 29 percent. What is the OCF for year 4?

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