On January $1,2017,$ AmerEx Transportation Company purchased a used aircraft at a cost of $$63,100,000.$ AmerEx

expects the plane to remain useful for five years $(5,500,000$ miles$)$ and to have a residual value of $$5,100,000.$

AmerEx expects to fly the plane $775,000$ miles the first year, $1,225,000$ miles each year during the second, third, and

fourth years, and $1,050,000$ miles the last year.

$($Click the icon to view the first year depreciation amounts under each method.$)$

Read the requirements.

Which depreciation method offers the highest tax advantage for the first year? Describe the nature of the tax

advantage.

The double$-$declining$-$balance method offers the tax advantage for the first year of the asset's use.

The advantage results from the greater amount of depreciation $($versus the other methods$)$ in the first year.

income.

How much income tax will AmerEx save for the first year of the airplane's use under the method you just selected

as compared with using the straight$-$line depreciation method? The company's income tax rate is $40\%.$ Ignore any

earnings from investing the extra cash. $($Round the depreciation rates to two decimal places. Round your final

answers to the nearest whole dollar.$)$

Compute the tax savings:

Income tax savings for first year

Reference answers in gray is correct complete part $2$ fully