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The cost of new machine is $220,000. The cost of shipping is $10,000 and of installation...

The cost of new machine is $220,000. The cost of shipping is $10,000 and of installation is $20,000. The required working capital is $25,000. Using the 3-year MACRS schedule, determine the depreciation expense in year 1. Round to the nearest penny. Do not include a dollar sign.

Year 3-YR MACRS
1 33.33%
2 44.45%
3 14.81%
4 7.41%
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Answer #1

Initial Investment of machine = Cost of machine + Shipping costs + Installation costs

= 220000 + 10000 + 20000

= 250000

Depreciation expense in year 1 = 250000 * 33.33%

= 83325

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