A construction company purchases 100 m of 40 mm diameter steel cable with an initial cost...

 

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A construction company purchases 100 m of 40 mm diameter steel cable with an initial cost of $4500. The annual interest rate is 4%, and annual maintenance costs are considered to be paid in their entireties at the end of the years in which their costs are incurred. The annual maintenance cost of the cable is $200/yr over a service life of nine years. Using Modified Accelerated Cost Recovery System (MACRS) depreciation and assuming a seven year recovery period, the depreciation allowance for the cable in the first year of operation is most nearly (A) $640 (B) $670 (C) $720 (D) $860 A construction company purchases 100 m of 40 mm diameter steel cable with an initial cost of $4500. The annual interest rate is 4%, and annual maintenance costs are considered to be paid in their entireties at the end of the years in which their costs are incurred. The annual maintenance cost of the cable is $200/yr over a service life of nine years. Using Modified Accelerated Cost Recovery System (MACRS) depreciation and assuming a seven year recovery period, the depreciation allowance for the cable in the first year of operation is most nearly (A) $640 (B) $670 (C) $720 (D) $860

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The detailed answer for the above question is provided below The correct answer is C 720 To ca... View the full answer