using the macrs rates from the following table, what is the book value of a $3,500 computer after 2 years…

using the macrs rates from the following table, what is the book value of a $3,500 computer after 2 years? year macrs rate 1 20.0% 2 32.0% 3 19.2% 4 11.52% 5 11.52% 6 5.76% book value = $? round to the nearest cent.

using the macrs rates from the following table, what is the book value of a $3,500 computer after 2 years? year macrs rate 1 20.0% 2 32.0% 3 19.2% 4 11.52% 5 11.52% 6 5.76% book value = $? round to the nearest cent.

Answer

Explanation:

Step1: Calculate depreciation in year 1

The depreciation in year 1 is the initial value times the year - 1 MACRS rate. The initial value of the computer is $V_0 = 3500$, and the year - 1 MACRS rate $r_1=0.20$. So the depreciation in year 1, $D_1 = V_0\times r_1=3500\times0.20 = 700$.

Step2: Calculate the value after year 1

The value of the computer after year 1, $V_1=V_0 - D_1=3500 - 700=2800$.

Step3: Calculate depreciation in year 2

The year - 2 MACRS rate $r_2 = 0.32$. The depreciation in year 2, $D_2=V_1\times r_2=2800\times0.32 = 896$.

Step4: Calculate the book value after 2 years

The book value after 2 years, $V = V_1 - D_2=2800-896 = 1904$.

Answer:

$1904.00$