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