Question: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 MACRS 14.29% 24.49% 17.49% 12.49% 8.93% 8.92% 8.93% 4.46%

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 MACRS 14.29% 24.49% 17.49% 12.49% 8.93% 8.92% 8.93% 4.46% Depreciation Rate A textile company invests $11 million in an open-end spinning machine. This was depreciated using the seven-year MACRS schedule shown above. If the company sold it immediately after the end of year 3 for $7 million, what would be the after-tax cash flow from the sale of this asset, given a tax rate of 40%? A. $3,436,000 B. $1,425,600 C. $5,574,400 D. $3,564,000

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