DataPoint Engineering is considering the purchase of a new piece of equipment for $390,000. It has an eight-year midpoint of its asset depreciation range (ADR). It will require an additional initial investment of $210,000 in nondepreciable working capital. Seventy-two thousand dollars of this investment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation and taxes for the next six are shown in the following table

Year Amount

1 $230,000

2 190,000

3 160,000

4 145,000

5 110,000

6 100,000

The tax rate is 40 percent. The cost of capital must be computed based on the following:

Cost

(aftertax) Weights

Debt K_d 9.20% 20%

Preferred stock K_p 13.80 10%Common equity

Common Equity

(retained earnings) K_e 8.00 70%

What is the annual depreciation schedule?