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I need help solving these problems. Pls help me by answering and showing explanations. CHAPTER 12 Question 3 (20 points): A tool costing $300 has
I need help solving these problems. Pls help me by answering and showing explanations.
CHAPTER 12 Question 3 (20 points): A tool costing $300 has no salvage value and will be depreciated over 3 years according to the sum-of-years'- digits method. The before tax cash flow (BTCF) due to the tool is shown. The tax rate is 35%. Finish the table below. SOYD Year BTCF Depreciation Taxable Income Taxes ATCF 0 -$300 $100 2 $150 3 $200 Question 4 (25 points): An asset (5-year property class) will be purchased for $100,000 (year 0). It will produce annual benefits of $80,000 per year (starting in year 1) for 6 years, after which time it will have a salvage value of zero and will be retired. The annual operating expenses are $15,000 (starting in year 1 through year 6). Use MACRS depreciation (Tables in Chapter 1 1) and the corporate income tax rate in Table 12-1 for calculations. Calculate the: (1) Before tax cash flows Depreciation each year (3) After-tax cash flows (4) Before tax rate of return (5) After tax rate of returnStep by Step Solution
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