Assume that at the beginning of 20X0, UPS, a FedEx competitor, purchased a used Boeing 737 aircraft at a cost of $25,000,000. UPS expects the plane to remain useful for 5 years (5 million miles) and to have a residual value of $5,000,000. UPS expects to fly the plane 750,000 miles the first year, 1,250,000 miles each year 2 through 4, and 500,000 miles the last year.

1. Compute UPS's first-year depreciation on the plane using the following methods:

a. Straight-line

b. Units-of-production

c. Double-declining-balance

2. Show the airplane's book value at the end of the first year under each depreciation method.