Homework Answers
a.
SL dep per year = (P-S)/N = (2000 - 450) / 7 = 221.43 ~ 221 (Nearest Dollar)
b.
d = 2 / n = 2/7
Depreciation in any year m = P* (1-d)^(m-1) *d
Depreciation in year 1 = 2000* (1- 2/7)^(1-1) *2/7 = 571.43
Depreciation in year 2 = 2000* (1- 2/7)^(2-1) *2/7 = 408.16
Depreciation in year 3 = 2000* (1- 2/7)^(3-1) *2/7 = 291.55
Depreciation in year 4 = 2000* (1- 2/7)^(4-1) *2/7 = 208.25
Cumulative depreciation through year 4 = 571.43 + 408.16 + 291.55 + 208.25 = 1479.39 ~ 1479 (Nearest Dollar)
c.
MACRS dep rate for 7 yr property are 0.1429, 0.2449, 0.1749, 0.1249, 0.0893, 0.0892, 0.0893 & 0.0446
Cumulative Dep through year 5 = (0.1429 + 0.2449 + 0.1749 + 0.1249 + 0.0893)*2000 = 1553.8 ~ 1554 (Nearest Dollar)
d.
BV after 4 yrs = 2000 - 221.43*4 = 1114.28 ~ 1114 (Nearest Dollar)
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