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