Fast Cars is considering a project that requires $138,000 of fixed assets that are classified as 5-year property for MACRS. What is the book value of these assets at the end of year 3? The MACRS allowance percentages are as follows, commencing with year one: 20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.

Question

Quizplus · Accepted Answer

To find the book value at the end of year 3, calculate the accumulated depreciation using the MACRS percentages for the first three years: 20% + 32% + 19.2% = 71.2%. The accumulated depreciation is 71.2% of $138,000, which is $98,256. Subtract this from the initial cost: $138,000 - $98,256 = $39,744.

Fast Cars Is Considering a Project That Requires $138,000 of Fixed