Question 8 Assume the following: A firm acquires an asset for $120,000 with a 5 year useful life and no salvage The asset will generate $50,000 of cash flow for all five years The tax rate is 20% The firm will depreciate the asset over four years on a straight-line (SL) basis for tax purposes and over five years on a SL basis for financial reporting purposes. Suppose tax rates rise during year 2 to 40%. At the end of year 2, the firm's balance sheet will show a deferred tax: liability of $2,400 liability of $4,800 asset of $4,800