Refer to Exhibit 18-6. Prepare a similar table of the changing ROI, assuming the following accelerated depreciation schedule. Assume income before depreciation of $150,000 per year. (If there is a loss, leave the ROIs column blank.)

Year Depreciation Te aSs Gnece BROCE Gee ana RC CU AGRA EEE eae ee $200,000 ERR AME Sel eae CAA A MT RE es at a 120,000 a asec casted MURA At a aENE Ad Seeted Rereae a caer I 72,000 ZAlah Rare ere te CeO nS Aa oae eee ee een 54,000 Serre de adiso ccna capstan usenet atin ation cas teaca 54,000 EO tallies Me ur cB Maw racer gen aed (ah $500,000 Required

a. How does your table differ from the one in Exhibit 18-6? Why?

b. What are the implications of the ROI pattern in your table?

c. Prepare a table similar to Exhibit 18-6, which focuses on residual income. Use a 10 percent rate to compute the imputed interest charge. The table should show the residual income on the investment during each year in its five-year life. Assume income before depreciation of $150,000 per year and straight-line depreciation with no salvage value.