Ex.1. a. Determine the annual depreciation schedule. (Do not round intermediate calculations. Round your depreciation base and annualdepreciation answers to the nearest whole dollar. Round your percentage depreciation answers to 3 decimal places.)Year1213456Year1b. Determine the annual cash flow for each year. Be sure to include the recovered working capital in Year 6. (Do not roundintermediate calculations and round your answers to 2 decimal places.)23DepreciationBase415PercentageDepreciationCash FlowAnnualDepreciation DataPoint Engineering is considering the purchase of a new piece of equipment for $220,000. It has an eight-year midpoint of its assetdepreciation range (ADR). It will require an additional initial investment of $120,000 in nondepreciable working capital. $30,000 of thisinvestment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation andtaxes for the next six are shown in the following table. Use Table 12-11. Table 12-12. Use Appendix B for an approximate answer butcalculate your final answer using the formula and financial calculator methods.Year Anount1 $179,0002>456156,000126,000111,00093,00083,000The tax rate is 25 percent. The cost of capital must be computed based on the following:DebtPreferred stockCommon equity (retained earnings)xdXpKeCost(aftertax) Weighta7.50%30411.2016.001060

Fixed assets are those assets which are being held by the business for longer period of time.…

a. Determine the annual depreciation schedule. (Do not round intermediate calculations. Round your depreciation base and annual depreciation answers to the nearest whole dollar. Round your percentage depreciation answers to 3 decimal places.) Year 1 2 13 4 5 6 Year 1 b. Determine the annual cash flow for each year. Be sure to include the recovered working capital in Year 6. (Do not round intermediate calculations and round your answers to 2 decimal places.) 2 3 4 Depreciation 1 Base 6 10 Percentage Depreciation Cash Flow Annual Depreciation