Problem 1 A firm has earnings of $12,000 before depreciation and taxes (EBTDA) A new piece of equipment is purchased and installed at a cost of $10,000. The equipment has a five year life for tax purpose and the firm pays 25% in income taxes A. What are the net income and quick cash flow for the firm in years two (2) and five (5) using: (a) Straight Line and (b) Modified Accelerated Cost Recovery Depreciation methods. B. What is the source of the difference in Net Income and Cash Flow? Assume MACRC deprecation percentages are as follows: Year Percentage 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% 6