A firm expects to have earnings before depreciation and taxes of $150,000 in each of the...

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A firm expects to have earnings before depreciation and taxes of $150,000 in each of the next four years. There are no interest payments and taxes are at a rate of 40%. The firm is considering the purchase of an asset costing $120,000 requiring $15,000 in installation costs and having a recovery period of three years. Use the following MARCS percentages for this asset - Yr 1: 33.3%; Yr 2: 44.5%; Yr 3: 14.8%; and Yr 4: 7.4% a. Calculate the annual depreciation for year three using the MACRS depreciation percentages. b. What is the Accumulated Depreciation in year three? c. What is the book value of the asset in year three? A firm expects to have earnings before depreciation and taxes of $150,000 in each of the next four years. There are no interest payments and taxes are at a rate of 40%. The firm is considering the purchase of an asset costing $120,000 requiring $15,000 in installation costs and having a recovery period of three years. Use the following MARCS percentages for this asset - Yr 1: 33.3%; Yr 2: 44.5%; Yr 3: 14.8%; and Yr 4: 7.4% a. Calculate the annual depreciation for year three using the MACRS depreciation percentages. b. What is the Accumulated Depreciation in year three? c. What is the book value of the asset in year three?

Answer rating: 100% (QA)

Given Earnings before depreciation and taxes EBDT 150000 per year for the next four years Tax rate 4... View the full answer