Year DepreciationSum of Depreciation Book value d1 $ 5,000.00 $ 5,000.00 $ 45,000.00 0.1818181818181822 $ 5,000.00 $ 10,000.00 $ 40,000.00 0.1636363636363643 $ 5,000.00 $ 15,000.00 $ 35,000.00 0.1454545454545454 $ 5,000.00 $ 20,000.00 $ 30,000.00 0.1272727272727275 $ 5,000.00 $ 25,000.00 $ 25,000.00 0.1090909090909096 $ 5,000.00 $ 30,000.00 $ 20,000.00 0.09090909090909097 $ 5,000.00 $ 35,000.00 $ 15,000.00 0.07272727272727278 $ 5,000.00 $ 40,000.00 $ 10,000.00 0.05454545454545459 $ 5,000.00 $ 45,000.00 $ 5,000.00 0.0363636363636364

10 $ 5,000.00 $ 50,000.00 $ - 0.0181818181818182

Year MACRS Cost Depreciation Cumulative depreciation1 10% $ 50,000.00 $ 5,000.00 $ 5,000.00 2 18% $ 50,000.00 $ 9,000.00 $ 14,000.00 3 14% $ 50,000.00 $ 7,200.00 $ 21,200.00 4 12% $ 50,000.00 $ 5,760.00 $ 26,960.00 5 9% $ 50,000.00 $ 4,610.00 $ 31,570.00 6 7% $ 50,000.00 $ 3,685.00 $ 35,255.00 7 7% $ 50,000.00 $ 3,275.00 $ 38,530.00 8 7% $ 50,000.00 $ 3,275.00 $ 41,805.00 9 7% $ 50,000.00 $ 3,275.00 $ 45,080.00

10 7% $ 50,000.00 $ 3,275.00 $ 48,355.00

Year MACRS PV SLD PV1 $ 5,000.00 $ 4,545.45 $ 5,000.00 $ 4,545.00 2 $ 9,000.00 $ 7,438.02 $ 5,000.00 $ 4,132.00 3 7200 $ 5,409.47 $ 5,000.00 $ 3,757.00 4 5760 $ 3,934.16 $ 5,000.00 $ 3,415.00 5 4610 $ 2,862.45 $ 5,000.00 $ 3,105.00 6 3685 $ 2,080.09 $ 5,000.00 $ 2,822.00 7 3275 $ 1,680.59 $ 5,000.00 $ 2,566.00 8 3275 $ 1,527.81 $ 5,000.00 $ 2,333.00 9 3280 $ 1,391.04 $ 5,000.00 $ 2,120.00

10 3275 $ 1,262.65 $ 5,000.00 $ 1,928.00 $ 32,131.73 $ 30,723.00

(B-S) dt DDB Sum of depreciation Book Value at end of year $ 50,000.00 $ 9,090.91 10000 $ 10,000.00 $ 40,000.00 $ 50,000.00 $ 8,181.82 8000 $ 18,000.00 $ 32,000.00 $ 50,000.00 $ 7,272.73 6400 24400 $ 25,600.00 $ 50,000.00 $ 6,363.64 5120 29520 $ 20,480.00 $ 50,000.00 $ 5,454.55 4096 33616 $ 16,384.00 $ 50,000.00 $ 4,545.45 3276.8 36892.8 $ 13,107.20 $ 50,000.00 $ 3,636.36 2621.44 39514.24 $ 10,485.76 $ 50,000.00 $ 2,727.27 2097.15 41611.39 $ 8,388.61 $ 50,000.00 $ 1,818.18 1677.72 43289.11 $ 6,710.89 $ 50,000.00 $ 909.09 1342.18 44631.29 $ 5,368.71

Book Value at end of t $ 45,000.00 $ 36,000.00 $ 28,800.00 $ 23,040.00 $ 18,430.00 $ 14,745.00 $ 11,470.00 $ 8,195.00 $ 4,920.00 $ 1,645.00

DD PV SOYD PV $ 10,000.00 $ 9,090.91 $ 9,090.91 $ 8,264.46 $ 8,000.00 $ 6,611.57 $ 8,181.82 $ 6,761.83 $ 6,400.00 $ 4,808.41 $ 7,272.73 $ 5,464.11 $ 5,120.00 $ 3,497.03 $ 6,363.64 $ 4,346.45 $ 4,096.00 $ 2,543.29 $ 5,454.55 $ 3,386.85 $ 3,276.80 $ 1,849.67 $ 4,545.45 $ 2,565.79 $ 2,621.44 $ 1,345.21 $ 3,636.36 $ 1,866.03 $ 2,097.15 $ 978.34 $ 2,727.27 $ 1,272.29 $ 1,677.72 $ 711.52 $ 1,818.18 $ 771.09 $ 1,928.00 $ 517.47 $ 909.09 $ 350.49

$ 31,953.42 $ 35,049.39

$ 18,800.00 First Cost $ - Salvage

7 Life200% Factor

Period Depreciation1 $2,685.71 2 $4,604.08 3 $3,288.63 4 $2,349.02 5 $1,794.39 6 $1,631.26 7 $1,631.26 8 $815.63 9 $18,800.00

$ 5,700,000.00 First Cost $ - Salvage

40 Life2% Factor

Period Depreciation1 $71,250.00 2 $142,500.00 3 $142,500.00 4 $142,500.00 5 $142,500.00 6 $142,500.00 7 $142,500.00 8 $142,500.00 9 $142,500.00

10 $142,500.00 11 $142,500.00 12 $142,500.00 13 $142,500.00 14 $142,500.00 15 $142,500.00 16 $142,500.00 17 $142,500.00 18 $142,500.00 19 $142,500.00 20 $142,500.00 21 $142,500.00 22 $142,500.00 23 $142,500.00 24 $142,500.00 25 $142,500.00 26 $142,500.00 27 $142,500.00 28 $142,500.00 29 $142,500.00 30 $142,500.00 31 $142,500.00 32 $142,500.00 33 $142,500.00 34 $142,500.00 35 $142,500.00 36 $142,500.00 37 $142,500.00 38 $142,500.00 39 $142,500.00 40 $142,500.00

$5,628,750.00

CITR=STR+FTR(1-STR+LTR).093+(.28)(1-.093) 35%

Taxable Income Tax Liability 170000 41550

A = P(A/P,i,n) = $5,000.00(A/P,0.15,4) = $1,751.50ATCF = BTCF – tax savings = 10.9%

dt=30000

Period Before Tax CF SOYD Before Tax income Net profit Net After Tax0 -120000 -1200001 30000 30000 0 0 0 300002 30000 24000 6000 1800 4200 282003 30000 18000 12000 3600 8400 264004 30000 12000 18000 5400 12600 246005 30000 6000 24000 10200 23800 39800

Salvage 30000After tax ROR 7.41%After Tax PW 7978.85

Year Base Book value Depreciation Charge Net book value 1 55000 4125 508752 50875 7631.25 43342.753 43243.75 6486.56 36757.194 36757.19 5513.58 31243.615 31123.61 4686.54 26557.076 26557.07 3983.56 22573.51

UCC at year 7 = $22,573.51Proceeds = $35,000.00Gain = $12,426.49Tax effect = $4225.01Net = $30,774.99

Period Before Tax CF Depreciation Cost Before Tax income0 -550001 10000 4125 58752 10000 7631 23693 10000 6487 35134 10000 5514 44865 10000 4687 53136 10000 3983.56 6016.44

Salvage 30774.99

Payback Period

Income Tax Net profit Net After Tax-120000

1998 3878 8003805 1563 9195

1195 2319 88051525 2961 84751807 3507 81932046 3971 7954

8.90%

Year BTCF MACRS Income Tax ATCF PW(10%)0 -180000 -180000 -1800001 90000 36000 54000 21600 68400 62181.822 90000 57600 32400 12960 77040 63669.423 90000 17280 72720 29088 60912 45762.094 75000 5880 2352 72648 54581.52

110880 46196.84