A company purchased an equipment worth $250,000. It will be depreciated using the straight-line depreciation over 8 years. Assume a tax rate of 20%.

Comment: This is the easiest depreciation method one percent per year. 

1. What is the book value of this asset at the end of years 1-8?
2. What is the depreciation expense in each of the years 1-8?
3. If the equipment can be sold for $5,000 at then end of Year 5, what is the after-tax salvage value?
4. If the equipment can be sold for $80,000 at then end of Year 5, what is the after-tax salvage value?

Answer rating: 100% (QA)

To solve this problem we need to use the straightline depreciation formula Depreciation expense per ... View the full answer