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Calculate the annual depreciation for the asset purchase

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Problem : A firm expects to have earnings before interest and taxes (EBIT) of $160,000 in each of the next 6 years. It pays annual interest of $15,000. The firm is considering the purchase of an asset that costs $140,000, requires $10,000 in installation cost, and has a recovery period of 5 years. It will be the firm's only asset, and the asset's depreciation is already reflected in its EBIT estimates.

Question 1a. Calculate the annual depreciation for the asset purchase using the MACRS depreciation percentages

Reference no: EM132468436

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