Engineering Economics Analysis
With steps, not just tables or excel.
A machine was purchased two years ago for $50,000 and had a depreciable life of five years and no expected salvage value. The owner is considering an offer to sell the machine for $25,000. For each of the depreciation methods listed, fill in the table below to determine the depreciation for year 2 and the book value at the end of year 2. (Assume a five-year MACRS recovery period.)
Depreciation Method | Depreciation for Year 2 | Book Value at End of Year 2
------------------- | ---------------------- | --------------------------
Straight-line (SL) | |
Sum-of-years-digits (SOYD) | |
Double declining balance (DDB) | |
Modified accelerated cost recovery system (MACRS) | |