Learning Objectives – Class 7
After today’s lecture, and after working the homework problems, the student should be able to
- Calculate when to change from modified accelerated cost recovery system to straight-line depreciation
- Work problems involving modified accelerated cost recovery system depreciation
- Derive a modified accelerated cost recovery system depreciation table for a life other than those listed in the tables
- Work problems involving MACRS for real property as well as personal property
- Work problems involving either corporate or individual personal taxes
- Work problems on before-tax and after-tax rates of returns on projects
- Work problems wherein inflation is included in the calculations
- Calculate inflation-adjusted, or real rates of return on a project
Topics covered in today’s class
- MACRS depreciation – need cost, no life, no salvage and can go below salvage
- When to change from double-declining balance to straight line depreciation
- Corporate and personal tax calculations
- The effects of inflation on cash flows
- Inflation-adjusted (real) rate of return on an investment