Metal stampings inc can purchase a new forging machine for, Business Economics

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Metal stampings inc can purchase a new forging machine for

Metal Stampings, Inc., can purchase a new forging machine for $400,000. After 20 years of use, the forge should have a salvage value of $25,000.

(a) Under MACRS, what depreciation is claimed in year 3?

(b) Under the straight-line (pre-1981) method, what depreciation is claimed in year 3?

(Answer: a. $69,960; b. $18,750)

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