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Angiletta Corporation is considering a new project requiring a $30,000 investment in test equipment with no salvage value.

Angiletta Corporation is considering a new project requiring a $30,000 investment in test equipment with no salvage value. The project would produce $12,000 of pretax income before depreciation at the end of each of the next six years. The company’s income tax rate is 40%. In compiling its tax return and computing its income tax payments, the company can choose between the two alternative depreciation schedules shown in the table. (Use Table B.1)

Straight-Line
Depreciation MACRS
Depreciation
Year 1 $ 3,000 $ 6,000
Year 2 6,000 9,600
Year 3 6,000 5,760
Year 4 6,000 3,456
Year 5 6,000 3,456
Year 6 3,000 1,728



Totals $ 30,000 $ 30,000



Required:
1.
Prepare a five-column table that reports amounts (assuming use of straight-line depreciation) for each of the following for each of the six years: (a) pretax income before depreciation, (b) straight-line depreciation expense, (c) taxable income, (d) income taxes, and (e) net cash flow. Net cash flow equals the amount of income before depreciation minus the income taxes. (Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)


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Accounting - 8233624.xls

Angiletta Corporation is considering a new project requiring a $30,000 investment in test equipment with no salvage value. The project would produce $12,000 of pretax income before depreciation at...

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