Module14HWSol - Chapter 8: Drill Problems 17, 19 and...

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Unformatted text preview: Chapter 8: Drill Problems 17, 19 and Application Problems 7 (a), 11. Drill Problems: 17. 19 (a) The MARCS depreciation schedule is (Textbook page 321, Table 8.3): 20%, 32%, 19.2%, 11.52%, 11.52% and 5.76 %. Then the depreciation is computed as ? times the MARCS of the corresponding year. For example, For example, the third years depreciation is: $600 19.2% = $115.2 . The taxable income is computed as the pure income with depreciation. For example, the taxable income of the third year is computed as: $1,000 $200 $100 $115.2 = $584.8 . However, the cashflow of the year should not count the depreciation. So the cash flow remains as $1,000 $200 $100 $584.8 34% = $501.168 . (b) The depreciation rate of each year is 100%/5 = 20% . By the half year convention, rates of the first year and the final year are 10% , respectively....
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Module14HWSol - Chapter 8: Drill Problems 17, 19 and...

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