Khalifa Computers has 3,000 shares of common stock outstanding. The company also has the following amounts in revenue and expense accounts.

Sales Revenue	85,000
General and Administrative Expense	4,500
Interest Expense	5%
Depreciation Expense	4,250
Preferred Stock Dividends	1,200
Selling Expense	4,000
Cost of Goods Sold	37,000
Equity Dividend	1,350
Secured Loan	56000

Calculate:

1. Gross profits.
2. Operating profits.
3. Net profits after taxes (assume a 30 percent tax rate).
4. Calculate the depreciation using MACRS approach for an asset which costs $85,000 and is being depreciated using a 5-year normal recovery period (depreciation rate is as follows: 20%, 32%, 19%, 12%, 12% and 5%). Will the depreciation amount be difference in case of straight line method when the scrap value of the asset is $5,000?