A company just purchased an intelligent robot, which has a first cost of $80,000. Since the robot

Question:

A company just purchased an intelligent robot, which has a first cost of $80,000. Since the robot is unique in its capabilities, the company expects to be able to sell it in 4 years for $95,000.

(a) If the company spends $10,000 per year in maintenance and operation of the robot, what will the company's MACRS depreciation charge be in year 2? Assume the recovery period for robots is 5 years and the company's MARR is 16% per year when the inflation rate is 9% per year.

(b) Determine the book value of the robot at the end of year 2.

MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...