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An asset with a first cost of $9,000 is depreciated using the Modified Accelerated Cost recovery System (MACRS) over a 5-year period. The cash flow
An asset with a first cost of $9,000 is depreciated using the Modified Accelerated Cost recovery System (MACRS) over a 5-year period. The cash flow before taxes (CFBT) is estimated at $10,000 for the first 4 years and $5000 thereafter as long as the asset is retained. The effective tax rate is 35%, and the money is worth 10% per year. In present worth dollars, how much of the cash flow generated by the asset over its recovery period is lost to taxes? The present worth (PW) of CFBT is determined to be $ D . The present worth (PW) of CFAT is determined to be $ . The difference between the two present worth (PW) values is determined to be $D
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