Problem 2 (30 points) Mary Meek, the owner of a flower shop, is considering buying a new van for deliveries. She has estimated that the new van would result in a savings of $25,000 per year over the old van. The new van would cost $45,000 and will have a useful life of six years (MACRS 5-year recovery period) at which time it will be sold for $4,500. Mary uses a 15% after-tax MARR and the van would be depreciated using MACRS. Should Mary purchase the van on an after-tax basis? Mary uses a 40% tax rate. Determine the depreciation schedule for straight line, 150% declining balance, and MACRS depreciation methods. (10 points) b. Using your MACRS depreciation values and the information above, determine if the van should be purchased on an after tax basis. (20 points) Straight Line Depreciation 150% DB Depreciation MACRS Depreciation a. EOY 2. 3 4 5 6 CFBT d TI Tax CFAT 0 2 3 4 5 6