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Intro Southwest Airlines just bought a new jet for $39,000,000. The jet falls into the 7-year...

Intro

Southwest Airlines just bought a new jet for $39,000,000. The jet falls into the 7-year MACRS category, with the following depreciation rates (half-year convention):

Year 1 2 3 4 5 6 7 8
Depr.
rate		 14.29% 24.49% 17.49% 12.49% 8.93% 8.92% 8.93% 4.46%

  

Part 1

What was the depreciation in year 5?

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Answer #1
Calculation of annual depreciation
Cost Dep Rate Depreciation
Year-1 $ 39,000,000 14.29% $    5,573,100
Year-2 $ 39,000,000 24.49% $    9,551,100
Year-3 $ 39,000,000 17.49% $    6,821,100
Year-4 $ 39,000,000 12.49% $    4,871,100
Year-5 $ 39,000,000 8.93% $    3,482,700
Year-6 $ 39,000,000 8.92% $    3,478,800
Year-7 $ 39,000,000 8.93% $    3,482,700
Year-8 $ 39,000,000 4.46% $    1,739,400
So year 5 depreciation will be $ 3,482,700
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