Question

A company purchased an asset for $3,200,000 that will be used in a 3-year project. The asset is in the 3-year MACRS class. The depreciation percentage each year is 33.33 percent, 44.45 percent, and 14.81 percent, respectively. What is the book value of the equipment at the end of the project

Answer 1

$237,120

Step-by-step explanation:

year depreciation % depreciation expense book value

1 33.33% $1,066,560 $2,133,440

2 44.45% $1,422,400 $711,040

3 14.81% $473,920 $237,120

the book value at the end of the project's life = $237,120, which is equivalent to 7.41% (the fourth year according to MACRS depreciation)