You just purchased some equipment that is classified as five-year property for MACRS. The MACRS rates are .2, .32, .192, .1152, .1152, and .0576 for Years 1 to 6, respectively. The equipment cost $218,000. What will the book value of this equipment be at the end of 3 years should you decide to resell the equipment at that point in time?a. $58, 467.20.b. $62, 784.00.c. $42, 336.67.d. 67, 670.40.e. $38, 532.80.

The correct answer is option (b) $62,784.00

Explanation:

From the given question, we find the book  equipment value at the end of 3 years

Year        MACRS %  l Annual depreciation  Annual deprecation  Book value

1                  0.2                  218000*.2               43600     174400

2                0.32               218000*.32              69760      104540

3                0.192             218000*192              41856         62784

4                0.1152          218000* .1152            251126     37670.4

5                 0.1152        218000* .1152             25113.6  12556.8

6              0.0576       218000* .0576             12556.8           0

Therefore, from the  above depreciation schedule.

At the end of 3 years the book value is $62784.

answer; test-retest;