telstar communications is going to purchase an asset for $500,000 that will produce $240,000 per year for the next four years in earnings before the depreciation and taxes. the assed eill 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 34 percent tax bracket.

Table 12-12 Depreciation percentages (expressed in decimals), Depreciation Year 3-Year MACRS 5-Year MACRS 7-Year 10-Year MACRS MACRS 15-Year 20-Year MACRS MACRS ........... 0.333 0.445 0.148 0.074 0.200 0.320 0.192 0.115 0.115 0.058 0.143 0.245 0.175 0.125 0.089 0.089 0.089 0.045 0.100 0.180 0.144 0.115 0.092 0.074 0.066 0.066 0.065 0.065 0.033 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 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 1.000 1.000 1.000 1.000 1.000 Fill in the schedule below for the next four years. Year 1 Year 2 Year 3 Year 4 0 $ 0 0 $ 0 Earnings before depreciation and taxes Depreciation Earnings before taxes Taxes Earnings after taxes Depreciation Cash flow S 0S 0S 0