An automatic copier is being considered that will cost $8,000, have a life of four years,...

  

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An automatic copier is being considered that will cost $8,000, have a life of four years, and no prospective salvage value at the end of that time. It is estimated that because of this venture, there will be a yearly gross income of $8,000. The operating cost during the first year will be $2,000, increasing by $100 each year thereafter. The company contemplating the purchase of this asset has an effective tax rate of 50%. Determine the after-tax cash flow for each year. First use straight line depreciation, and then use double declining balance switching to straight line depreciation. An automatic copier is being considered that will cost $8,000, have a life of four years, and no prospective salvage value at the end of that time. It is estimated that because of this venture, there will be a yearly gross income of $8,000. The operating cost during the first year will be $2,000, increasing by $100 each year thereafter. The company contemplating the purchase of this asset has an effective tax rate of 50%. Determine the after-tax cash flow for each year. First use straight line depreciation, and then use double declining balance switching to straight line depreciation.