Return to question Telstar Communications is going to purchase an asset for $680,000 that will produce $330,000 per year for the next four years in earnings before depreciation and taxes. The asset will be depreciated using the three-year MACRS depreciation schedule in Table 12- 12. (This represents four years of depreciation based on the half-year convention.) The firm is in a 25 percent tax bracket. Fill in the schedule below for the next four years. Answer is complete but not entirely correct. $ $ Earnings before depreciation and taxes Depreciation Earnings before taxes Taxes Earnings after taxes Depreciation Cash flow Year 1 330,000 $ 226,444 103.556 $ 25.839 77.717 $ 226,644 304,361 $ Year 2 330,000 $ 302,260 27,740 $ 6,935 X 20.805 $ 302,260 323,065 $ Year 3 330,000 $ 100,708 229.292 $ 57,323 171.969 $ 100,708 272,677 $ Year 4 330,000 50,388 279.612 69,903 209.709 50,388 260,097 $ $ Drou 10 of 24 Mort Table 12-12 Depreciation percentages (expressed in decimals) 5-Year MACRS 15-Year MACRS Depreciation Year 1 2 3 3-Year MACRS 0.333 0.445 0.148 0.074 0.200 0.320 0.192 0.115 0.115 0.058 7-Year MACRS 0.143 0.245 0.175 0.125 0.089 0.089 0.089 0.045 4 5 6 7 8 10-Year MACRS 0.100 0.180 0.144 0.115 0.092 0.074 0.066 0.066 0.065 0.065 0.033 BER 0.050 0.095 0.086 0.077 0.069 0.062 0.059 0.059 0.059 0.059 0.059 0.059 0.059 0.059 0.059 0.030 9 10 11 12 20-Year MACRS 0.038 0.072 0.067 0.062 0.057 0.053 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.017 1.000 13 14 15 16 17 18 19 20 21 1.000 1.000 1.000 1.000 1.000