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Louie’s Leisure Products is considering a project which will require the purchase of $1.3 million in...

Louie’s Leisure Products is considering a project which will require the purchase of $1.3 million in new equipment. Shipping and installation will be an additional $100,000. For tax purposes, the equipment will be depreciated straight-line to a salvage value of $175,000 over the 7-year life of the project. The expected sales from this project is 1.2 million a year. Net working capital equal to 20 percent of sales will be required to support the project. What is the depreciation expense of this project in Year 4? Round to the nearest penny. Do not include a dollar sign in your answer.

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Answer #1

Depreciation for 4th year = $175,000 (1300000+100000-175000)/7

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