Search for question
Question

An asset with a first cost of $30,000 is depreciated using 5-year MACRS recovery. The CFBT is estimated at $20,000 for the first 3 years and $12,000 thereafter as long

as the asset is retained. The effective tax rate is 40%, and money is worth 4% per year. In present worth dollars, how much of the cash flow generated by the asset over its recovery period is lost to taxes? PW of the Cash Flow Before Taxes (CFBT) = PW of the Cash Flow After Taxes (CFAT) = Cash flow lost to taxes =

Fig: 1

Fig: 2

Fig: 3

Fig: 4