Problem $9-07$

problem 9-01 A has earn.ngs of $17 ,OOO before Interest, depreaat.on, and taxes. A new piece of equpment is installed at a cost of $9,000. The eqUipment be depreoated over five years, and the firm pays 3S percent of Its earnings n taxes. What are the earnings and cash flows for the firm in years 2 and 5, using the two methods of depreciation? Use Exhibit 94 to answer the questions, Round your answers to the nearest dollar. Straight-line Modified Accelerated Cost Recovery Year 2 Earmngs before deprectatton and taxes $ expense Earmnqs after depreciation Taxes (35% tax rate) Net earn.ngs Cash flow Year 5 Year 2 Year 5