Trust Engineering Company Is Considering the Purchase of a New

question 28

Multiple Choice

Trust Engineering Company is considering the purchase of a new machine to replace an existing one. The old machine was purchased 5 years ago at a cost of $20,000, and it is being depreciated on a straight line basis to a zero salvage value over a 10-year life. The current market value of the old machine is $14,000. The new machine, which falls into the MACRS 5-year class, has an estimated life of 5 years, it costs $30,000. The change in depreciation expense to be considered while capital budgeting for this machine is _____. The MACRS rates for 5-year class are Year 1-20%, Year 2-32%, Year 3-19%, Year4-12%, Year 5-11%, Year 6-6%.

• A) $10,500
• B) $23,400
• C) $44,000
• D) $20,000
• E) $17,000

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Definitions:

Client's Thoughts

The ideas, beliefs, or mental processes expressed by individuals receiving therapeutic services, often explored during counseling or therapy.

Clarifying

The technique of making a statement or situation less confused and more comprehensible, often used in communication to ensure understanding.

Demonstrates a Paraphrase

Shows or exemplifies how to restate text or speech using different words, typically to clarify meaning.

Tried Everything

A colloquial expression indicating that numerous different methods or approaches have been attempted to solve a problem or address a situation, often without success.