Suppose that a project has a depreciable investment of $600,000 and falls under the following MACRS year 5 class depreciation schedule: year 1: 20 percent; year 2: 32 percent; year 3: 19.2 percent; year 4: 11.5 percent; year 5: 11.5 percent; and year 6: 5.8 percent.
Calculate depreciation for year 2.
A)$120,000
B)$192,000
C)$96,000
D)$115,200

Question

Quizplus · Accepted Answer

To calculate the depreciation for year 2, we need to find the depreciation rate for year 2 using the MACRS schedule.

Year 1: 20% = 0.20
Year 2: 32% = 0.32
Year 3: 19.2% = 0.192
Year 4: 11.5% = 0.115
Year 5: 11.5% = 0.115
Year 6: 5.8% = 0.058

Depreciation rate for year 2 is 32%.

Depreciation = Depreciation rate x Depreciable investment
Depreciation = 0.32 x $600,000
Depreciation = $192,000

Therefore, the correct answer is B) $192,000.

Suppose That a Project Has a Depreciable Investment of $600,000