You invest in a new work vehicle during the tax year that costs you $78,000, plus $2,000 for delivery and set up. Marginal tax rate is 40%.
A) What is the depreciation expense each year using the straight-line method of depreciation?
B) What is the depreciation expense each year using the MACRS method of depreciation?
C) What is the tax shield each year from each method?
D) Which method would you use for tax purposes? How about profit reporting? Explain.