Liberty University-Portal Mail-Hoy, John-Outloc x y M Homework 6 -) Liezto.mhedu

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Liberty University-Portal Mail-Hoy, John-Outloc x y M Homework 6 -) Liezto.mheducation.com/hm.tpx x(MTable-12-12.jpg (553×468 x 9 value 4.00 points 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 depreciation and taxes. The asset will 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. Fill in the schedule below for the next four years. (Input all amounts as positive values. Round your answers to the nearest whole dollar amount.) Year 1 Year 2 Year 3 Year 4 240,000 240,000 $ 240,000 $ 240,000 Earnings before depreciation and taxes Depreciation Earnings before taxes Taxes Earnings after taxes Depreciation Cash flow Hints References eBook & Resources Hint# 11:48 AM - ( 12/2/2015

Explanation / Answer

Telstar Communications (All figures in $) Year 1 Year 2 Year 3 Year 4 Earnings before Depreciation and Taxes 240000 240000 240000 240000 Depreciation using 3 year MACRS Table as given 166500 222500 74000 37000 Earnings before Taxes 73500 17500 166000 203000 Taxes @ 34% 24990 5950 56440 69020 Earnings after Taxes 48510 11550 109560 133980 Depreciation as above 166500 222500 74000 37000 Cash Flow 215010 234050 183560 170980

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