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  3. a company purchases an asset that costs $46,000. t

A company purchases an asset that costs $46,000. This asset qualifies as three-year property under MACRS....

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Accounting

A company purchases an asset that costs $46,000. This assetqualifies as three-year property under MACRS. The company uses anafter-tax discount rate of 12% and faces a 31% income tax rate.(Use Table 1, Table 2 and Exhibit 12.4.)

1. Demonstrate that the PV of the depreciation deductions, when theincome tax rate is 31%, is $11,472.
2. Given an after-tax discount rate of 12%, what tax rate would beneeded in order for the PV of the depreciation deductions to equal$14,260? Use the Goal Seek function of Excel.

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