Introduction

Overview

In this lesson, we focus on depreciation, depreciation methods, and After-Tax Cash Flow. An investor is allowed to utilize these methods to recover some types of capital cost. This lesson will explain how these techniques can be used to calculate the taxable income and income tax. To calculate the income tax, taxable income needs to be determined properly.

Learning Objectives

At the successful completion of this lesson, students should:

• understand how Before-Tax Cash Flow and After-Tax Cash Flow are calculated;
• be able to apply Straight Line, Declining Balance, and Declining Balance Switching to Straight Line methods for depreciation calculations; and
• be familiar with modified accelerated cost recovery system (MACRS), Depletion, and Amortization.

What is due for Lesson 7?

This lesson will take us one week to complete. Please refer to the Course Syllabus for specific time frames and due dates. Specific directions for the assignment below can be found within this lesson.

Questions?

If you have any questions, please post them to our discussion forum, located under the Modules tab in Canvas. I will check that discussion forum daily to respond. While you are there, feel free to post your own responses if you, too, are able to help out a classmate.