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XYZ Company is considering a project that requires a new equipment. The new machine will cost...

XYZ Company is considering a project that requires a new equipment. The new machine will cost the firm $220,000. In order to have the machine in working condition, XYZ will spend $7,000 in installation and $3,000 in shipping. Since it will produce more, a $10,000 investment in net working capital is required. The new machine will be depreciated over the straight-line depreciation method down to the salvage value of $5,000. The life of the asset is 5 years. What is the depreciation expense of this project in Year 2? Round to the nearest penny. Do not include a dollar sign in your answer.

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Answer #1

We see that the Depreciation expense of the project in Year 2=(220000+7000+3000-5000)/5=45000

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