You work as a financial analyst at Morgan Stanley. You are evaluating how much Acme Limo should charge a client who will lease a car for $7$ years. It will cost Acme $$75,000$ to buy the car and the car can be depreciated on a five$-$year MACRS schedule. Acme Limo$$s pretax administrative costs including Maintenance, Insurance and Selling Cost are $$10,000$ per year and they occur at the beginning of each year. The after tax cost of capital is $10\%$ and the tax rate is $20\%.$ Lease payments are made in advance, that is$,$ at the start of each year. The inflation rate is zero.

a$.$ How much is the depreciation in year $4?$ Blank $1($sample answer:$$500\mathrm{.}50)$

b$.$ How much is the depreciation tax shield in year $4?$Blank $2($sample answer:$$500\mathrm{.}50)$

c$.$ How much is the present value of after tax administrative costs?Blank $3($sample answer:$$2500\mathrm{.}50)$

d$.$ What is the total present value of Depreciation tax Shield? Blank $4($sample answer:$$2500\mathrm{.}50)$

e$.$ What is the before tax break$-$even operating lease rate? Blank $5($sample answer: $$2500\mathrm{.}50)$

f$.$ What is the after tax break even operating lease rate? Blank $6($sample answer: $$2500\mathrm{.}50)$

Depreciation Table for $5-$year asset