A firm is considering purchasing two

assets.

Asset L will have a useful life of 20 years and cost $5 million;

it

will have installation costs of $1 million but no salvage or

residual value. Asset S will have a useful life of 8 years and

cost

$2 million; it will have installation costs of $500,000 and

a

salvage or residual value of $400,000. Which asset will have

a

greater annual straight-line depreciation?

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