Homework Answers
Assuming full information is available in above images and there is no incremental earning (as not reported in questions ) so earning is going to be sale in Year 2 and Year 5.
Depreciation as per SLM = 9000/5 = 1800
Depreciation as per MACR = Year 2 - 32% and year 5 - 11.52%
Year 2 = 9000* 32% = 2880 and Year 5 = 9000* 11.52% = 1036.80
Kindly find the net earning and cash flow (Point 5 and Point 6) in image below.
| Straight Line | MACR | ||||
| Year 2 | Year 5 | Year 2 | Year 5 | ||
| 1 | Earning Before Depreciation and Taxes | 23000 | 23000 | 23000 | 23000 |
| 2 | Depreciation Exp | 1800 | 1800 | 2880 | 1037 |
| 3 | Earning After Depreciation (1 - 2) | 21200 | 21200 | 20120 | 21963 |
| 4 | Taxes 15% | 3180 | 3180 | 3018 | 3294 |
| 5 | Net Earning (3 - 4) | 18020 | 18020 | 17102 | 18669 |
| 6 | Cash Flow (5 + 2) | 19820 | 19820 | 19982 | 19706 |
Hope this helps, feel free to share your feedback. Thanks and have a good day.
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