PROBLEM 2 - Fill in values for all cells highlighted in yellow. Provide all values to the nearest whole dollar. Paysource Insurance Co. (PIC) is a large corporation that serves the midwest states. To increase the efficiency of its data processing operations, the company recently purchased a large computer system for $3,100,000 and spent $262,195 to renovate a building to accommodate the new equipment. The useful life of the computer system is estimated to be eight years when it could be sold for $160,000, and the equipment falls into the MACRS five-year class. The company uses the straight line method to calculate book depreciation and has a 21 percent tax rate. a. Place the proper numbers in the cells below. Capital cost Renovation cost Salvage Value Useful life $3,100,000 $262,195 $160,000 $8 b. What annual depreciation expense will be reported on the financial statements of PIC? Annual depreciation expense $367,500 c. In the depreciation table below, fill in the values for the annual depreciation expenses and the book values that PIC will report in each year for tax purposes. Depreciable basis $3,100,000 Allowance Recovery Year percentage 1 20% Depreciation expense $620,000 Book value $3,100,000 2 32% $992,000 3 19% 4 12% 5 11% 6 6% Total 100%