An 8-year recovery-period conveyor system for grading eggs is planned for DDB depreciation. The system had a first cost of $30,000 with a $9000 salvage value. The annual operating cost allocated to the conveyor is $7000 per year. The book value at the end of year 2 is nearest to: (choose one)
(a) $7560
(b) $11,812
(c) $16,875
(d) $14,300
d = 2/8 = 0.25
BV2 = 30,000(1 – 0.25)² = $16,875
Answer is (c) $16,875
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