Maurer Corporation is considering a capital budgeting project that would involve investing $200,000 in equipment with an estimated useful life of 4 years and no salvage value at the end of the useful life. Annual incremental sales from the project would be $550,000 and the annual incremental cash operating expenses would be $440,000. A one-time renovation expense of $40,000 would be required in year 3. The company's income tax rate is 30%.The company uses straight-line depreciation on all equipment.The income tax expense in year 3 is:
A. $21,000
B. $33,000
C. $18,000
D. $6,000
Answer: D
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