A company purchases an asset at a cost $200,000 and depreciates as a MACRS 5- year...

 

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A company purchases an asset at a cost $200,000 and depreciates as a MACRS 5- year property. The Market value of the asset the end of year 6 is $40,000. the company's incremental income-tax rate is 35%. The company's cash flows for the asset are as shown. 1 2 3 4 5 6 Year Initial Cost Revenue O&M Expenses. Salvage 0 $200K $60K $15K $65K $65K $15K $20K $70K $20K a) The first-year after tax-cash flow is b) The fourth -year taxable income is equal to c) The tax on depreciation recapture in year 6 is equal to $70K $25K $65K $25K $40K A company purchases an asset at a cost $200,000 and depreciates as a MACRS 5- year property. The Market value of the asset the end of year 6 is $40,000. the company's incremental income-tax rate is 35%. The company's cash flows for the asset are as shown. 1 2 3 4 5 6 Year Initial Cost Revenue O&M Expenses. Salvage 0 $200K $60K $15K $65K $65K $15K $20K $70K $20K a) The first-year after tax-cash flow is b) The fourth -year taxable income is equal to c) The tax on depreciation recapture in year 6 is equal to $70K $25K $65K $25K $40K

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