A Project Under Consideration by Khalia Corporation Will Require the Purchase

Multiple Choice

A project under consideration by Khalia Corporation will require the purchase of new equipment at a cost of $1,000,000 with a 3 year economic life. Kalia's marginal tax rate is 25%. What is the difference in tax expense in the second year if depreciation is computed using MACRS rates rather than straight line?

A) $445,000
B) $333,000
C) $112,000
D) $28,000