A com purchased an asset for $300 that is used in a five-year project

Finance Dec 22, 2020

A com purchased an asset for $300 that is used in a five-year project. The salvage value of the asset is 5220 The esset is classified as a five-year MACRS asset for tax purposes. The tax rate la 35. Find the amount of depreciation that has been written off by the end of the year three 5220 5570 5178 $450 3692

Expert Solution

The amount is computed as follows:

= Purchase price of asset x (Sum of depreciation rates from year 1 to year 3)

= $ 800 x (20% + 32% + 19.20%)

= $ 800 x 71.2%

= $ 570 Approximately

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