Expansionary to a contractionary monetary policy

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Reference no: EM13729283

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

MACRS 20% 32% 19.20% 11.52% 11.52% 5.76%

Depreciation rate

1. A bakery invests $34,000 in a light delivery truck. This was depreciated using the 5 years MACRS schedule shown above. If the company sold it immediately after the end of year 2 for $21,000. What would be the after-tax cash flow from sale of this asset, given a tax rate of 40%

A. $11,208

B. $9,792

C. $4,483

D. $16,517

2. If the Federal Reserve were to change from an expansionary to a contractionary monetary policy, this would be an example of_________

A. independent risk

B. diversification risk

C. systematic risk

D. unsystematic risk

Reference no: EM13729283

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