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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Chapter1: Making Economics Decisions
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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.
Transcribed Image Text: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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