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Homework 29 Solution

Homework 29 Solution - Homework 29 Solution 1 A new...

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Homework 29 Solution 1. A new electric saw for cutting small pieces of lumber in a furniture factory has a cost basis of \$4000, a 5-year depreciable life, and no salvage value. Calculate the annual depreciation amounts and book values each year using double-declining-balance switching to straight-line depreciation. Under DDB depreciation, d = 200%/5 = 40% so D t = 0.4 BV t-1 each year. DDB SL D t Year BV t D t D t Used 1 \$4000.00 \$1600.00 \$800.00 \$1600.00 2 \$2400.00 \$960.00 \$600.00 \$960.00 3 \$1440.00 \$576.00 \$480.00 \$576.00 4 \$864.00 \$345.60 \$432.00 \$432.00 5 \$432.00 \$172.80 \$432.00 \$432.00 2. Repeat Problem 1 using the MACRS with a 5-year recovery period. MACRS MACRS Year BV t d t D t 1 \$4000.00 20.0 \$800.00 2 \$3200.00 32.0 \$1280.00 3 \$1920.00 19.2 \$768.00 4 \$1152.00 11.5 \$460.00 5 \$692.00 11.5 \$460.00 6 \$232.00 5.8 \$232.00 3. In May 2009, your company purchased a new computer system for \$32,500. Assume your tax year
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