QUESTION $8$

Spotted Potato is evaluating a project that would require the purchase of a piece of equipment for $$496,000$ today. During year $1,$ the project is expected to have relevant revenue of $$404,000,$ relevant costs of $$157,000,$ and relevant depreciation of $$111000.$ Spotted Potato would need to borrow $$496,000$ today for the equipment and would need to make an interest payment of $$28,000$ to the bank in $1$ year. Relevant operating cash flow for the project in year $1$ is expected to be $$192,000.$ What is the tax rate expected to be in year $1?$

$14\mathrm{.}73\%($plus or minus $3$ bps$)$

$40\mathrm{.}44\%($plus or minus $3$ bps$)$

$18\mathrm{.}38\%($plus or minus $3bps)$

$56\mathrm{.}26\%($plus or minus $3$ bps$)$

none of the answers are within $3bps$ of the correct answer