Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 43

The taxable income for a motorcycle sales and repair business is estimated to be $150,000 this year. A single-value tax rate of 39% is used. A new engine diagnostics system will cost $40,000 and have an average annual depreciation of $8000. The equipment will increase gross income by an estimated $9000 and expenses by $2000 for the year. Compute the expected change in income taxes for the year if the new system is purchased.