Local Construction Company is considering the purchase of a backhoe for $300,000.The expected life is four years.The company is comparing the depreciation tax shield using MACRS versus the straight-line method.If MACRS is used, the MACRS life is three years with a depreciation rate of 200 percent annually.Regardless of the method of depreciation used, the mid-year convention will be observed.The company's tax rate is 40 percent.The straight-line method assumes mid-year convention, and the cost of capital is 16 percent.
Required: (Round all calculations to the nearest dollar.)

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The Answer of Local Construction Company is considering the purchase of a backhoe for $300,000.The expected life is four years.The company is comparing the depreciation tax shield using MACRS versus the straight-line method.If MACRS is used, the MACRS life is three years with a depreciation rate of 200 percent annually.Regardless of the method of depreciation used, the mid-year convention will be observed.The company's tax rate is 40 percent.The straight-line method assumes mid-year convention, and the cost of capital is 16 percent.
Required: (Round all calculations to the nearest dollar.)

Local Construction Company Is Considering the Purchase of a Backhoe