A small machine shop has an estimated annual taxable income of $70,000 during 2008. Owing to an increase in business, the company is considering purchasing a new machine (in January of 2008) that will generate an additional (before tax) annual revenue of $100,000 over next 5 years. The new machine requires an investment of $120,000, which will be depreciated according to a 5- year MACRS property. What is the incremental income tax rate due to the purchase of the equipment in tax year 2008?
a. 37.23%
b. 25.25%
c. 36.43%
d. 39%
