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Problem 9 - 0 7 A firm has earnings of $ 1 5 , 0 0 0 before interest, depreciation, and taxes. A new piece
Problem
A firm has earnings of $ before interest, depreciation, and taxes. A new piece of equipment is installed at a cost of $ The equipment will be depreciated over five years, and the firm pays percent of its earnings in taxes. What are the earnings and cash flows for the firm in years and using the two methods of depreciation? Use Exhibit to answer the questions. Round your answers to the nearest dollar.
Modified Accelerated
Straightline
Year
Earnings before depreciation and taxes
Depreciation expense
Earnings after depreciation
Taxes tax rate
Net earnings
Cash flow
Cost Recovery
Year
Year
$
$
$
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