Abbott placed into service a flexible manufacturing cell costing \($850,000\) early this year for production of their analytical testing equipment. Gross income due to the cell is expected to be \($750,000\) with deductible expenses of \($475,000.\) Depreciation is based on MACRS-GDS, and the cell is in the 7-year property class, calling for a depreciation percentage of 14.29 percent, or \($121,465,\) in the first year. Half of the cell cost is financed at 11 percent with principal paid back in equal amounts over 5 years. The first year’s interest is therefore \($46,750,\) while the principal payment is \($85,000.

a.\) Determine the taxable income for the first year.

b. Determine the tax paid due to the cell during the first year using a 40 percent marginal tax rate.

c. Determine the after-tax cash flow for the first year.