8 A company purchases an asset that costs $10,000. This asset qualifies as 3-year property under MACRS. The company uses an after- tax discount rate of 12% and faces a 40% income tax rate. (Use Table1. Table 2 and Exhibit124) I. Demonstrate that the PV of the depreciation deductions, when the income tax rate is 40%, is $3,218. 2. Given an after-tax discount rate of 12%, what tax rate would be needed in order for the PV of the depreciation deductions to equal $4,000? Use the Goal Seek function of Excel. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Demonstrate that the PV of the depreciation deductions, when the income tax rate is 40%, is $3,218. (Do not round intermediate calculations. Round "Tax Savings", Present Values" andMACRS Percentages" to 2 decimal places and-PV factor" to 3 decimal places.) Year MACRS % Required 2> A company purchases an asset that costs $10,000. This asset qualifles as 3-year property under MACRS. The company uses an after- tax discount rate of 12% and faces a 40% income tax rate. (Use Table 1, Table 2 and Exhibit124) 1. Demonstrate that the PV of the depreciation deductions, when the income tax rate is 40%, is $3,218. 2. Given an after-tax discount rate of 12%, what tax rate would be needed in order for the PV of the depreciation deductions to equal $4,000? Use the Goal Seek function of Excel. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Given an after-tax discount rate of 12%, what tax rate would be needed in order for the PV of the depreciation deductions to equal $4,000? Use the Goal Seek function of Excel. (Round your answer to 2 decimal places.) Required1 E 1 Present Value of $1 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 20% 25% 30% 0.962 0.952 0.943 0.935 0.926 0917 0.909 0.901 0.893 0.885 0.877 0.870 0.833 0.00 0.769 0.925 0907 0890 0 873 0857 0.842 0.826 0.812 0.797 0.783 0.769 0.756 0.694 0.640 0.592 0.89 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658 0.579 0.512 0.455 0.855 0.823 0.792 0.763 0.735 0.70S 0.683 0.659 0.636 0.613 0.592 0.572 0.482 0.410 0.350 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.402 0.328 0.269 0.790 0.746 0.705 0.666 0.630 0.596 0564 0.535 0.507 0.480 0.456 0.432 0.335 0.262 0.207 0.760 0.711 0.665 0623 0.583 0547 0.513 0482 0452 0.425 0.400 0.376 0.279 0.210 0.159 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.327 0.233 0.16S 0.123 0.703 0.645 0.592 0544 0.500 0.460 0.424 0.391 0.361 0.333 0.30S 0.284 0.194 0.134 0.094 10 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.162 0.107 0.073 11 0.650 0.585 0.527 0475 0.429 0.38S 0.350 0.317 0.287 0.261 0.237 0.215 0.135 0.086 0.056 0.625 0.557 0.497 0444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0.137 0.112 0.069 0.043 eriods4% 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.163 0.093 0.055 0.033 14 0.577 0.505 0.442 0.3SS 0.340 0.299 0.263 0.232 0.205 0.131 0.160 0.141 0.07S 0.044 0.025 0.555 0.431 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.065 0.035 0.020 0.534 0.458 0.394 0.339 0.292 0.252 0.213 0.18S 0.163 0.141 0.123 0.107 0.054 0.028 0.015 17 0513 0436 0.371 0.317 0.270 0.231 0.19 0.170 0.146 0.125 0.10S 0.093 0.045 0.023 0.012 0.494 0.416 0.350 0.296 0.250 0.212 0.130 0.153 0.130 0.111 0.095 0.081 0.038 0.018 0.009 19 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.133 0.116 0.098 0.083 0.070 0.031 0014 0.007 20 0.456 0.377 0.312 0.258 0.215 0.17S 0.149 0.124 0.104 0.087 0.073 0.061 0.026 0.012 0.005 22 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0083 0.068 0.056 0.046 0.018 0.007 0.003 390 0.310 0.247 0.197 0.158 0.126 0.102 0.082 0.066 0.053 0.043 0035 0.013 0.005 0.002 25 0.375 0.295 0.233 0.134 0.146 0.116 0.092 0.074 0.059 0.047 0.038 0030 0.010 o.004 0.001 30 0.308 0.231 0.174 0.131 0099 0.075 0.057 0044 0.033 0.026 0.020 0015 0.004 0.001 0.000 35 0.253 0.181 0.130 0.094 0.068 0049 0036 0.026 0019 0014 0010 0.00s o.002 0000 o000 40 0.208 0.142 0.097 0.067 0.046 0.032 0022 0.015 0011 000S 0.005 0.004 0001 0.000 0.000 TABLE 2Present Value of Annuity of $1 Periods 4% 5% 6% 7% 8% 9% 10% iisusi3% 14% i5% 20% 25% 30% 1 0.962 0952 0943 0935 0926 0.917 0.909 0.901 0893 0885 0.877 0.870 0.833 000 0.769 2 1.556 1.859 1833 1.50S 1.783 1.759 1.736 1.713 1690 668 1647 1626 1.528 1440 1.361 3 2.775 2.723 2673 2.624 2.577 2.531 2.487 2.444 2.402 2.361 2.322 2.283 2.106 1.952 1.816 4 3.630 3.546 3.465 3387 3.312 3.240 3.170 3.102 3.037 2.974 2914 2.855 2.589 2.362 2.166 5 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3.433 3.352 2.991 2.639 2.436 6 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.993 3.889 3.784 3.326 2951 2.643 7 6.002 5.786 5582 5389 5.206 5.033 4868 4.712 4.564 4423 4.238 4.160 3.605 3.161 2.802 S 6.733 6.463 6210 5.971 5.747 5,535 5.335 5.146 4.968 4.799 4.639 4437 3.837 3.329 2.925 9 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.537 5.328 5,132 4.946 4.772 4.031 3.463 3.019 10 8.111 7.722 7.360 7.024 6.710 6413 6.145 5.8S9 5.650 5.426 5.216 5019 4.192 3.571 3.092 8.760 3.306 7.837 7.499 7139 6.305 6.495 6.207 5.938 5.687 5.453 5.234 4.327 3.656 3,147 12 9.385 3.8638384 7.943 7.536 7.161 6.314 6.492 6.194 5.918 5.660 5.421 4.439 3.725 3.190 13 9986 9.3948.853 $ 358 7.904 7.437 7.103 6.750 6424 6.122 5.842 5.583 4.533 3.780 3.223 14 10.563 9.599 9.295 8.745 8.244 7.786 7.367 6982 6628 6.302 6.002 5.724 4611 3.824 3.249 15 11.118 10.330 9.712 9.108 8559 8.061 7606 7.191 6811 6462 6.142 5.847 4.675 3,859 3.268 16 11652 10.338 10,106 9447 8851 8.313 7.824 7.379 6974 6604 6.265 5954 4.730 3.887 3.283 2 166 11274 10.477 9.763 9.122 .544 8.022 7.549 7.120 6729 6373 6047 4.775 3.910 3.293 Is 12659 11690 10328 10059 9372 8756 .201 7.702 7250 6 840 6 467 6 128 4812 3 928 3.30 19 13134 12 085 11.158 10336 9604 8950 8.365 7.839 7366 6938 6550 6.198 4843 3 942 3.311 20 13.590 12.462 11470 10.594 9818 9.129 8.514 7.963 7.469 7.025 6623 6.259 4.870 3.954 3.316 22 14.451 13,.163 12042 11.061 10201 9442 8.772 8.176 7645 7.170 6743 6.359 4909 3.970 3.323 247 13,799 12.550 11469 10529 9707 .985 8.348 7.784 7.203 6835 6434 4937 3981 3.327 15 622 14094 12.783 11.654 10675 9823 9077 3422 7.843 7.330 6873 6.464 4948 3985 3 329 30 17.292 15.372 13.765 12.409 11258 10.274 9427 8.694 8.055 7.496 7003 6.566 4979 3 995 3.332 12 948 11.655 10 567 9.644 8.855 s.176 7.586 7.070 6617 4992 3.998 3333 7 159 15046 13.332 11.925 10.757 9.779 8951 3.244 7.634 7.105 6.642 4997 3999 3.333 EXHIBIT 12.4 MACRS Depreciation Rates Year 3-year 5-year 7-year 10-year 15-year 20-year 1 33.33 20.00 14.29 10.00 5.00 3.75 2 44.45 32.00 24.49 18.00 9.50 7.22 3 14.81 19.20 17.49 14.40 8.55 6.68 4 7.41 52* 12.49 11.52 7.70 6.18 11.52 8.93* 9.22 6.935,71 5.76 8.927.376.23 5.28 8.92 655 590* 4.89 4.47 6.55 5.90 4.52 6.56 5.91 * 6.55 5.90 4.46 3.28 etc. etc. 10