Shockers Corp. acquires an asset for $200,000 which they estimate 3 years as the service life. For any taxable income, Shockers Corp uses a tax rate of 50%.

a) Given double declining balance depreciation method, calculate the deprecation rate and then the depreciation amounts for year 1 through 3. How much tax will this corporation pay and what will be the ATCF for each of the following scenarios for the given year ?

t BV(t) D(t)

0

1

2

3

b) After 3 years the asset is sold for $80,000.

c) After 2 years the asset is sold for $300,000.

d) After one year the asset is sold for $20,000