Please help me with these economics multiple choice questions. Show how you brie

Question

Please help me with these economics multiple choice questions. Show how you briefly got the answers.

Thank you

A chemical production company has purchased a new mixing tank for $475,000 to replace an older, smaller tank that a trade-in value of $25,000. The equipment will be depreciated using a MACRS recovery period of ten years. Use this information to solve the following questions: What is the cumulative depreciation through eight (8) years? If the equipment is sold during the 5 h year of ownership, what is the book value in year 5?

Explanation / Answer

Depreciation base = $475,000 (MACRS doesn't consider trade-in value)

(10) (e)

(11) (a)

**MACRS Depreciation % source: http://www.smbiz.com/sbrl012.html

Year Depreciation Base ($) Annual Depreciation (%)** Annual Depreciation ($) Ending Book Value ($) Cumulative Depreciation ($) A B C = A x B D E 1 4,75,000 10 47,500 4,27,500 47,500 2 4,75,000 18 85,500 3,42,000 1,33,000 3 4,75,000 14.4 68,400 2,73,600 2,01,400 4 4,75,000 11.52 54,720 2,18,880 2,56,120 5 4,75,000 9.22 43,795 1,75,085 2,99,915 6 4,75,000 7.37 35,008 1,40,078 3,34,923 7 4,75,000 6.55 31,113 1,08,965 3,66,035 8 4,75,000 6.55 31,113 77,853 3,97,148 9 4,75,000 6.56 31,160 46,693 4,28,308 10 4,75,000 6.55 31,113 15,580 4,59,420

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