Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year* Recovery year 3 years 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% Totals 100% 100% 100% 100% A firm is considering...

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Finance

Rounded Depreciation Percentages by Recovery Year Using MACRSfor
First FourProperty Classes
Percentageby recovery year*
Recovery year 3years 5years 7years 10years
1 33% 20% 14% 10%
2 45% 32% 25% 18%
3 15% 19% 18% 14%
4 7% 12% 12% 12%
5 12% 9% 9%
6 5% 9% 8%
7 9% 7%
8 4% 6%
9 6%
10 6%
11 4%
Totals 100% 100% 100% 100%
Afirm is considering renewing its equipment to meet increased demandfor its product. The cost of equipment modifications is $1.81million plus $120,000 in installation costs. The firm willdepreciate the equipment modifications under? MACRS, using a?5-year recovery period Additional sales revenue from the renewalshould amount to $1.19 million per? year, and additional operatingexpenses and other costs? (excluding depreciation and? interest)will amount to 38% of the additional sales. The firm is subject toa tax rate of 40 ?(Note?: Answer the following questions for eachof the next 6? years.)
a. Whatincremental earnings before? depreciation, interest, and taxes willresult from the? renewal?
b. Whatincremental net operating profits after taxes will result from the?renewal?
c. Whatincremental operating cash inflows will result from the?renewal?

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Rounded Depreciation Percentages by Recovery Year Using MACRSforFirst FourProperty ClassesPercentageby recovery year*Recovery year3years5years7years10years133%20%14%10%245%32%25%18%315%19%18%14%47%12%12%12%512%9%9%65%9%8%79%7%84%6%96%106%114%Totals100%100%100%100%Afirm is considering renewing its equipment to meet increased demandfor its product. The cost of equipment modifications is $1.81million plus $120,000 in installation costs. The firm willdepreciate the equipment modifications under? MACRS, using a?5-year recovery period Additional sales revenue from the renewalshould amount to $1.19 million per? year, and additional operatingexpenses and other costs? (excluding depreciation and? interest)will amount to 38% of the additional sales. The firm is subject toa tax rate of 40 ?(Note?: Answer the following questions for eachof the next 6? years.)a. Whatincremental earnings before? depreciation, interest, and taxes willresult from the? renewal?b. Whatincremental net operating profits after taxes will result from the?renewal?c. Whatincremental operating cash inflows will result from the?renewal?

Rounded Depreciation Percentages by Recovery Year Using MACRSfor
First FourProperty Classes
	Percentageby recovery year*
Recovery year	3years	5years	7years	10years
1	33%	20%	14%	10%
2	45%	32%	25%	18%
3	15%	19%	18%	14%
4	7%	12%	12%	12%
5		12%	9%	9%
6		5%	9%	8%
7			9%	7%
8			4%	6%
9				6%
10				6%
11				4%
Totals	100%	100%	100%	100%

Afirm is considering renewing its equipment to meet increased demandfor its product. The cost of equipment modifications is $1.81million plus $120,000 in installation costs. The firm willdepreciate the equipment modifications under? MACRS, using a?5-year recovery period Additional sales revenue from the renewalshould amount to $1.19 million per? year, and additional operatingexpenses and other costs? (excluding depreciation and? interest)will amount to 38% of the additional sales. The firm is subject toa tax rate of 40 ?(Note?: Answer the following questions for eachof the next 6? years.)






a. Whatincremental earnings before? depreciation, interest, and taxes willresult from the? renewal?
b. Whatincremental net operating profits after taxes will result from the?renewal?
c. Whatincremental operating cash inflows will result from the?renewal?