Capital equipment costing $250,000 today has $50,000 salvage value at the end of five years. If the straight-line depreciation method is used, what is the book value of the equipment at the end of two years?

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The straight-line depreciation method spreads the cost of the equipment evenly over its useful life. The annual depreciation is calculated as (Cost - Salvage Value) / Useful Life = ($250,000 - $50,000) / 5 = $40,000 per year. After two years, the total depreciation is $40,000 * 2 = $80,000. Therefore, the book value at the end of two years is Cost - Accumulated Depreciation = $250,000 - $80,000 = $170,000.

Capital Equipment Costing $250,000 Today Has $50,000 Salvage Value at the End