Depreciation Year 5 Year Schedules 7 Year Schedule 0 20% 14.29% 1 32% 24.49% 2 1

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Depreciation Year 5 Year Schedules 7 Year Schedule 0 20% 14.29% 1 32% 24.49% 2 19.2% 17.49/e 3 11.52% 12.49% 4 11.52% 8.93% 5 5.76% 8.92% 6 8.93% 7 4.46% Three problems-points vary 1. Startup Clark starts a machine shop in Arab to do metalwork repairs and small jobs. He buys two lathes and a vertical milling machine for $42,000. He also buys, second hand,three Windows XP computer systems plus a printer, all for $800, to keep books, print invoices,and do purchasing. The equipment will be depreciated according to the schedules printed above. Clark estimates that once he gets the equipment in place, he will sell $30,000 of work the first year and $60,000 of work the next 4 years. Each year he will spend $8.000 on steel and $7,000 on rent. All the labor will be done by Clark and his daughter, and they will take no salary. Clark has set the business up as an S-corporation, and he and his daughter own all the shares They both pay a tax rate of 29%. Estimate the take home pay for Clark and has daughter during each of the first five years of operation. What is the net present value of the business for years 0 to 5?

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