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An asset with 5-year MACRS life will be purchased for $20,000. It will produce net annaul benefits of $5,000 per year for 6 years, after
An asset with 5-year MACRS life will be purchased for $20,000. It will produce net annaul benefits of $5,000 per year for 6 years, after which time it will have a net salvage value of zero and will be retired. The company's marginal tax rate is 35%. Complete the following after-tax cash flow table.
\begin{tabular}{|c|c|c|c|c|c|c|} \hline EOY & BTCF & \begin{tabular}{c} MACRS \\ Depreciation \end{tabular} & Taxable Income & Taxes & & ATCF \\ \hline 0 & -20000.00 & & & & & -20000.00 \\ \hline 1 & 5000.00 & -4000.00 & 1000.00 & 350.00 & & 4650.00 \\ \hline 2 & 5000.00 & -6400.00 & -1400.00 & -490.00 & & 5490.00 \\ \hline 3 & 5000.00 & 3840.00 & 1160.00 & 406.00 & 4594.0 & \\ \hline 4 & 5000.00 & 2304.00 & 2696.00 & 943.60 & 4056.4 & \\ \hline 5 & 5000.00 & 576.00 & 4424.00 & 1548.40 & 3451.6 & \\ \hline 6 & 5000.00 & 288.00 & 4712.00 & 1649.20 & 3350.8 & \\ \hline \end{tabular}Step by Step Solution
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