Question

using the macrs rates from the following table, what is the book value of a $4,500 computer after 2 years?

year	macrs rate
2	32.0%
3	19.2%
4	11.52%
5	11.52%
6	5.76%

book value = $?
round to the nearest cent

Explanation:

Step1: Calculate total depreciation rate for 2 years

The MACRS rates for year 1 is 20.0% and for year 2 is 32.0%. So total depreciation rate $r = 20.0\% + 32.0\% = 52.0\% = 0.52$.

Step2: Calculate depreciation amount

Depreciation amount $D = \text{Cost} \times r = 4500 \times 0.52$.
$D = 4500 \times 0.52 = 2340$.

Step3: Calculate book value

Book value $BV = \text{Cost} - D = 4500 - 2340$.
$BV = 2160$.

Answer:

$\$2160.00$