Classified as unique risk for an auto manufacturer

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Reference no: EM131991545

1. Which of the following risk factor would be classified as a unique risk for an auto manufacturer?

a. Interest rates

b. Steel prices

c. Business cycles

d. All of the above

e. None of the above

2. Eastern Inc. purchases a machine for $70,000. This machine qualifies as a five-year recovery asset under MACRS with the fixed depreciation percentages as follows: year 1 = 20.00%; year 2 = 32.00%; year 3 = 19.20%; year 4 = 11.52%. The firm has a tax rate of 40%. If the machine is sold at the end of two years for $50,000, what is the cash flow from disposal?

a. $50,000

b. $43,440

c. $39,875

d. $33,600

e. None of the above

Reference no: EM131991545

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