Annual gross incomes and expenses were recorded

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Reference no: EM131561058

Four years ago ABB purchased an asset for $300,000 with an estimated salvage of $60,000. Depreciation was $60,000 per year. The following annual gross incomes and expenses were recorded. The asset was sold for $60,000 after 4 years.

(a) Tabulate the cash flows by hand after an effective 32% tax rate is applied.

Use the format of Table 17–3.

(b) Continue the table above and calculate the net income (NI) estimates.

Year of ownership 1 2 3 4

Gross income, $ 80,000 150,000 120,000 100,000

Expenses, $ 20,000 40,000 30,000 50,000

Reference no: EM131561058

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