Bell’s Amusements purchased an expensive ride for their theme and amusement park situated within a cityowned expo center. Bell’s had a multiyear contract with the expo center. The ride cost \($1.35\) million, installed.

Gross income from the ride was \($420,000\) per year, with operating expenses of \($120,000.\) Bell’s anticipated that the ride would have a useful life of 12 years, after which the net salvage value would be \($0.\) After 4 years, the city and Bell’s were unable to reach an agreement regarding an extended contract. In order to expedite Bell’s departure, the expo center agreed to purchase the ride and leave it in place. Right at the end of the fourth fiscal year, the expo center paid to Bell’s the \($900,000\) unrecovered investment based on using straight-line depreciation. Corporate income taxes are 40 percent, and the after-tax MARR is 9 percent. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR after 4 years.

a. Use straight-line depreciation (no half-year convention).

b. Use MACRS-GDS and state the appropriate property class.

c. Use double declining balance depreciation (no half-year convention, no switching).