One of the methods that the Internal Revenue Service allows for computing depreciation of certain business property is the sum-of-the-years'-digits method. If a property valued at C dollars has an estimated useful life of N years and a salvage value of S dollars, then the amount of depreciation D, allowed during the nth year is given by D (CS)- N-(n-1) SN (0 ≤ n ≤N) where S is the sum of the first N positive integers. Thus, N(N + 1) 2 SN = 1+ 2+ + N = The amount of depreciation allowed for a printing machine, which has an estimated useful life of 5 years and an initial value of $450,000 (with no salvage value), is $90,000/year using the straight-line method of depreciation. Determine the amount of depreciation that would be allowed for the first year if the printing machine were depreciated using the sum-of-the-years'-digits method described above. (Round your answer to the nearest cent.) $ Which method would result in a larger depreciation of the asset in its first year of use? O straight-line method O sum-of-the-years'-digits method

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Chapter2: Second-order Linear Odes
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One of the methods that the Internal Revenue Service allows for computing depreciation of certain business property is the sum-of-the-years'-digits method. If a property valued at \( C \) dollars has an estimated useful life of \( N \) years and a salvage value of \( S \) dollars, then the amount of depreciation \( D_n \) allowed during the \( n \)th year is given by:

\[
D_n = (C - S) \frac{N - (n - 1)}{S_N} \quad (0 \leq n \leq N)
\]

where \( S_N \) is the sum of the first \( N \) positive integers. Thus,

\[
S_N = 1 + 2 + \cdots + N = \frac{N(N + 1)}{2}.
\]

The amount of depreciation allowed for a printing machine, which has an estimated useful life of 5 years and an initial value of \$450,000 (with no salvage value), is \$90,000/year using the straight-line method of depreciation. Determine the amount of depreciation that would be allowed for the first year if the printing machine were depreciated using the sum-of-the-years'-digits method described above. (Round your answer to the nearest cent.)

\[ \$ \underline{\hspace{2cm}} \]

Which method would result in a larger depreciation of the asset in its first year of use?
- ○ straight-line method
- ○ sum-of-the-years'-digits method
Transcribed Image Text:One of the methods that the Internal Revenue Service allows for computing depreciation of certain business property is the sum-of-the-years'-digits method. If a property valued at \( C \) dollars has an estimated useful life of \( N \) years and a salvage value of \( S \) dollars, then the amount of depreciation \( D_n \) allowed during the \( n \)th year is given by: \[ D_n = (C - S) \frac{N - (n - 1)}{S_N} \quad (0 \leq n \leq N) \] where \( S_N \) is the sum of the first \( N \) positive integers. Thus, \[ S_N = 1 + 2 + \cdots + N = \frac{N(N + 1)}{2}. \] The amount of depreciation allowed for a printing machine, which has an estimated useful life of 5 years and an initial value of \$450,000 (with no salvage value), is \$90,000/year using the straight-line method of depreciation. Determine the amount of depreciation that would be allowed for the first year if the printing machine were depreciated using the sum-of-the-years'-digits method described above. (Round your answer to the nearest cent.) \[ \$ \underline{\hspace{2cm}} \] Which method would result in a larger depreciation of the asset in its first year of use? - ○ straight-line method - ○ sum-of-the-years'-digits method
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