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What is amount of depreciation deduction company expense

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Reference no: EM132967843

The Terme Corporation is contemplating the purchase of new equipment, which may potentially increase revenues by 25%. Currently, sales are $730,000 per year and cost of sales are 55% of sales. The equipment is expected to last for 5 years with no residual value. The cash outflow expected at the beginning of the year is $356,500.

Problem 1: What is the amount of depreciation deduction the company could expense annually assuming the straight - line depreciation method is used?

Multiple Choice

Option 1: $71,300
Option 2: $39,215
Option 3: $73,000
Option 4: $32,085

Reference no: EM132967843

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