Reference no: EM132488951

Question 1: A firm is considering purchasing an asset that will cost $5 million. Other depreciable costs include $800,000 in installation costs. If the asset is classified in the 5-year class, what is the annual depreciation for years 1, 3, and 6 for this asset, using the fixed depreciation percentages given by MACRS? (The percentages are 20.00%, 19.20%, and 5.76%, respectively.)

Option 1: $1,160,000, $1,113,600, and $334,080 for years 1, 3, and 6, respectively

Option 2: $5,800,000, $1,160,000, and $1,113,600 for years 1, 3, and 6, respectively

Option 3: $1,856,000, $1,113,600, and $334,080 for years 1, 3, and 6, respectively

Option 4: $1,160,000, $1,113,600, and $668,160 for years 1, 3, and 6, respectively