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Englehard purchases a slurry-based separator for the mining of the clay that costs $750,000 and has an estimated useful life of 10
years, a MACRS-GDS property class of 7 years, and an estimated salvage value of $55,000 after 10 years. It was financed using a
$205,000 down payment and a loan of $545,000 over a period of 5 years with interest at 10%. Loan payments are made in equal
annual amounts (principal plus interest) over the 5 years.
a. What is the amount of the MACRS-GDS depreciation taken in the 3rd year?
Depreciation = $
$
b. What is the book value at the end of the 3rd year?
Book value = $
$
c. Returning to the original situation, what is the amount of the MACRS-GDS depreciation taken in the 3rd year if the separator is
also sold during the 3rd year?
Depreciation = $
$
Use depreciation percentages to 2 decimal places. Round final answers to whole dollar. Tolerance is ± 50.
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