A piece of equipment having a negligible salvage and scrap value is estimated to have a MACRS and straight line recovery period of 5 years. The original cost of the equipment was $50,000. Determine (1) the depreciation charge for the second year if straight-line deprecia- tion is used and the percent of the original investment paid off in the first 2 years, and (2) the depreciation charge for the fifth year if the modified acceleration cost recovery system (MACRS) is used, and the percent of the original investment paid off in the first 2 years.

A piece of equipment having a negligible salvage and scrap value is estimated to have a MACRS and straight line recovery period of 5 years. The original cost of the equipment was $50,000. Determine (1) the depreciation charge for the second year if straight-line deprecia- tion is used and the percent of the original investment paid off in the first 2 years, and (2) the depreciation charge for the fifth year if the modified acceleration cost recovery system (MACRS) is used, and the percent of the original investment paid off in the first 2 years.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

100%

A piece of equipment having a negligible salvage and scrap value is estimated to have a
MACRS and straight line recovery period of 5 years. The original cost of the equipment was
$50,000. Determine (1) the depreciation charge for the second year if straight-line deprecia-
tion is used and the percent of the original investment paid off in the first 2 years, and (2) the
depreciation charge for the fifth year if the modified acceleration cost recovery system
(MACRS) is used, and the percent of the original investment paid off in the first 2 years.

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