Complete the last four columns of the table below using an effective tax rate of 40% for an asset that has a first cost of $20,000, no salvage value, and a 3-year recovery period. Use (a) straight line depreciation, and (b) MACRS depreciation. (All cash flows are in $1000 units.)


(a) In $1000 units for monetary values.



(b) In $1000 units for monetary values.



MACRS rates Te = 0.40



Sample: year 1: D = 20(0.3333) = $6.666

TI = 8 - 2 - 6.666 = $- 0.666

Taxes = - 0.666(0.40) = $- 0.266

CFAT = 8 - 2 - (- 0.266) = $6.266

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