Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 53

The Columbus Electrical Company expects to have an annual taxable income of $650,000 from its residential accounts over the next two years. The company is bidding on a two-year wiring service for a large apartment complex. This commercial service requires the purchase of a new truck equipped with wire-pulling tools at a cost of $60,000. The equipment falls into the MACRS five-year class and will be retained for future use (instead of being sold) after two years, indicating no gain or loss on the property. The project will bring in additional annual revenue of $220,000, but it is expected to incur additional annual operating costs of $150,000. Compute the marginal tax rates applicable to the project's operating profits for the next two years.