1. Depreciation HW Problems
A company in the 39% marginal tax bracket purchased and installed MACRS Class 7 equipment with the following data:
1st Cost: $12 000
Salvage @ 8 years: $
1.) Compute the depreciation and book values for years 1 through 8, and put them into a table for each of the following depreciation methods:
a.) Straight Line Depreciation.
b.) Double Declining Balance.
c.) Sum of Years Digits.
d.) MACRS Depreciation.
2.) If the equipment is sold for $3 000 on December 31st of Year 4, compute the tax effect for that year (how much tax is owed or refunded).
3.) If the equipment is sold for $3 000 on January 1st of Year 5, compute the tax effect for that year (how much tax is owed or refunded).

2. ATCF HW Problem
4.) A company in the 34% marginal tax bracket purchased and installed a new process 1 year ago for $ This year, the process produced parts that were sold for $8.25 each. The material costs for each one were $ For the same year, the operator was paid $17.65/hour (with benefits) and worked 2040 hours of straight time; and the processing equipment required $880 of maintenance.
To purchase the MACRS Class 3 equipment, a loan payment of
$9 158 was made, and $7 300 of that payment went towards the principal.
a.) Compute and construct the information for the Net Profit Statement for the past year (Year 2), including Net Income (before tax).
b.) Compute the After Tax Cash Flow for the same year.
c.) If the processing equipment is sold for $3 000 on Jan.1 of the 3rd Year, how much money from the sale will they pay in taxes?