A firm purchases a new piece of equipment for $150,000. Suppose the following data reflect the before-tax cash flow and annual operating expenses. MACRS depreciation is used, and the equipment is a 5-year property. What is the first-year after-tax cash flow using the current federal tax rate of 21 percent?

Year

Before-tax

cash flow

O&M

Expenses

0

–$150,000



1

60,000

$10,000

2

63,000

13,000

3

66,000

16,000

4

69,000

19,000

5

72,000

22,000

6

75,000

25,000