A dance club purchased new sound equipment for $ 25352. It will work for 5 years and has no salvage value. Their tax rate is 41 percent, and their annual revenues are constant at $14384. For financial reporting, the straight-line depreciation method is used, but for tax purposes depreciation is accelerated to 35 percent in years 1 and 2 and 30 percent in Year 3. For purposes of this exercise ignore all expenses other than depreciation. Assume that the tax rate changes for years 4 and 5 from 41 percent to 31 percent. What will be the deferred tax liability as of the end of year three()
A. $3144.
B. $2948.
C. $1443.