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7.3 A refinery is planning the addition of a small dewaxing unit. It is estimated that the fixed capital investment is $63MM. Prepare a depreciation schedule using the MACRS method with half-year convention. What is the book value at the end of the fourth year?

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Since the estimated life is not given the Book value has been computed using the life of 3 vears, 5 years, 7 vears & 20 years Cost Table 7-3. Straight Line Method (Half-Year Convention) 63,000,000 Year 3-Year 5-Year 7-Year 20-Year Depreciation Depreciation Deprecia Depreciatio Depreciatio Depreciatio Deprecia Depreciation Rate in 9 expense | tion Ratel n expenseln Rate in%| n expense! tion Ratel expense in% in% 16.6710,502,100 33.33 20,997,900 33.33 20,997,900 16.67- 10,502,1001-20 12,600,0001- 10 6,300,000 2012,600,000 20 12,600,000 7.14 4,498,200 14.29 9,002,700 14.299,002,700 14.28 8,996,400 14.29 9,002,700 14.28 8,996,400 2.5 1,575,000 5 3,150,000 5 3,150,000 2 1 4 5 6 7 8 5 3,150,000 2,00,00014.299,002,7005 3,150,000 10 6,300,000 5 3,150,000 902,700 53,150,000 5 3,150,000 7.144,498,200 63,000,000 63,000,000 63,000,000 63,000,000 Cost Accumulated Depreciation as at end of 4 years Book Value 63,000,000 44,100,000 18,900,000 31,500,000 31,500,000 11,025,000 51,975,000

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