Please show work!! 6. A com has bought a new machine with the life time of 3 yea

Question

Please show work!!

6. A com has bought a new machine with the life time of 3 years for a total cost of investment is borrowed at 10% per year with repayment of an equal uniform amounts at the end of each year in 2 years The machine generates total income of per year and incurred operating expense of $60,000 per year. The company uses the third year for a total and its marginal tax rate is 40%. The machine is sold at the of s75,000. a) hat will be the size of each payment fo the S180,000debt? How much ofeach payment is interest and how much of each payment is principal (i towards the s400,000 debt)? t Payment/yr Interes Principal Paymentyr Remaining principal balance b) What will be the depreciation amount and book value for this investment for years 1 through 3 using the MACRS Depreciation T BV

Explanation / Answer

a) Calculation of repayment of debt In 2 years Payment/yr Interest principal Remaining Balance 1 14151 85522 94478 2 5195 94478 0 b) Depreciation amount using MACRS Depreciation Method Year Depreciation Book Value 1 30000 150000 2 60000 90000 3 60000 30000 4 30000 0

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