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In year 1. Firm A paid $50,000 cash to purchase a tangible business asset. In year 1 and year 2 , it deducted $3,140 and

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In year 1. Firm A paid $50,000 cash to purchase a tangible business asset. In year 1 and year 2 , it deducted $3,140 and $7,200 depreciation with respect to the asset. Firm As marginal tax rate in both years was 21 percent. Now assume that Firm A borrowed $50,000 to purchase the asset. In each year, it paid $3,800 annual interest on the debt. The interest payments were deductible. Required: a. Compute firm A's net cash flow attributable to the asset purchase in each year. b. Compute Firm A's adjusted basis in the asset at the end of each year

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