Scottsdale Print Shop expects to have an annual taxable income of $300,000 from its regular business over the next two years. The company is also considering the proposed acquisition of a new printing machine to expand current business to offer in its product catalog. Themachine's installed price is $105,000. The machine falls into the MACRS seven-year class, and it will have an estimated salvage value of $30,000 at the end of six years. The machine is expected to generate additional before tax revenue of $140,000 per year.
(a) Determine the company's annual marginal (incremental) tax rates over the next two years with the proposed investment in the printing machine.
(b) Determine the company's annual average tax rates over the next two years with the machine.