An automated assembly robot that cost $400,000 has a depreciable life of 5 years with a $100,000 salvage value. The MACRS depreciation rates for years 1, 2, and 3 are 20.00%, 32.00%, and 19.20%, respectively. What is the book value at the end of year 3? Year 5? Year 6?
What will be an ideal response?
3 years: BV3 = 400,000 - 400,000(0.20 + 0.32 + 0.192)
= $115,200
5 years: BV5 = 400,000(0.0576)
= $23,040
6 years: MACRS always depreciates to BV = 0 in its last year
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