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| Teaching Since: | May 2017 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
J. B. Hunt, Inc., an overland freight company, has purchased new trailers for $150,000 and expects to realize a net $80,000 in gross income over operating expenses for each of the next 3 years. The trailers have a recovery period of 3 years. Assume an effective tax rate of 35% and an interest rate of 15% per year.
(a) Show the advantage of accelerated depreciation by calculating the present worth of taxes for the MACRS method versus the classical SL method. Since MACRS takes an additional year to fully depreciate the basis, assume no CFBT beyond year 3, but include any negative tax as a tax savings.
(b) Show that the total taxes are the same for both methods.
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