1. A firm is considering purchasing an asset that will cost $5 million. Other depreciable costs...

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1. A firm is considering purchasing an asset that willcost $5 million. Other depreciable costs include $800,000 ininstallation costs. if the asset is classified as a 5 year classwhat is the annual depreciation for years 1, 3, and 6 for thisassist, using the fixed depreciation percentages given by MACRS?(20%, 19.20%, 5.76%and 8.93% respectively)
a. $1,856,000, $1,113,600, and $334,080 for year 1, 3, and 6respectively
b. $1,160,000, $1,113,600, and $334,080 for year 1, 3, and 6respectively
c. $1,160,000, $1,113,600, and $668,160 for year 1, 3, and 6respectively
d. $5,800,000, $1,160,000 and $1,113,600 for year 1, 3, and 6respectively
2. With a line of credit, the bank iscompensated
a. based on the outstanding balance of the loan
b. based on the principal value of the credit line
c. exclusively with a fixed annual payment
d. based on a fixed interest rate tied to the T-bill rate
3. The current book value of an asset serves as thebasis for determining the gain or loss at disposal.
a. True
b. False

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QUESTION1 The fiveyear life MACRS depreciation rates are 20 32 1920 1120 1120 and 576 per the year1 year2 year3 year4 year 5 and year 6 respectively Years Annual Depreciation Year 1 896000 Year 3 See Answer

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1. A firm is considering purchasing an asset that willcost $5 million. Other depreciable costs include $800,000 ininstallation costs. if the asset is classified as a 5 year classwhat is the annual depreciation for years 1, 3, and 6 for thisassist, using the fixed depreciation percentages given by MACRS?(20%, 19.20%, 5.76%and 8.93% respectively)a. $1,856,000, $1,113,600, and $334,080 for year 1, 3, and 6respectivelyb. $1,160,000, $1,113,600, and $334,080 for year 1, 3, and 6respectivelyc. $1,160,000, $1,113,600, and $668,160 for year 1, 3, and 6respectivelyd. $5,800,000, $1,160,000 and $1,113,600 for year 1, 3, and 6respectively2. With a line of credit, the bank iscompensateda. based on the outstanding balance of the loanb. based on the principal value of the credit linec. exclusively with a fixed annual paymentd. based on a fixed interest rate tied to the T-bill rate3. The current book value of an asset serves as thebasis for determining the gain or loss at disposal.a. Trueb. False