Telstar Communications is going to purchase an asset for $460,000 that will produce $220,000 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 1212. (This represents four years of depreciation based on the half-year convention.) The firm is in a 35 percent tax bracket.

(This answer is correct with the exception of year 1 and year 2 taxes which I couldn't figure out) Fill in the schedule below for the next four years.

	Year 1	Year 2	Year 3	Year 4
Earnings before depreciation and taxes	$220,000	$220,000	$220,000	$220,000
Depreciation	153,333	204,496	68,126	34,045
Earnings before taxes	$66,667	$15,504	$151,874	$185,955
Taxes			53,156	65,084
Earnings after taxes	$66,667	$15,504	$98,718	$120,871
Depreciation	153,318	204,496	68,126	34,045
Cash flow	$219,985	$220,000	$166,844	$154,916