Four years ago ABB purchased an asset for $300,000 with an estimated salvage of $60,000. Depreciation was $60,000 per year. The following annual gross incomes and expenses were recorded. The asset was sold for $60,000 after 4 years.
(a) Tabulate the cash flows by hand after an effective 32% tax rate is applied.
Use the format of Table 17–3.
(b) Continue the table above and calculate the net income (NI) estimates.
Year of ownership 1 2 3 4
Gross income, $ 80,000 150,000 120,000 100,000
Expenses, $ 20,000 40,000 30,000 50,000