What Is the Maximum Depreciation Expense Deduction for Year 2

question 57

Multiple Choice

What is the maximum depreciation expense deduction for Year 2 (2017) for a passenger automobile, used 100 percent for qualified business use, placed in service on June 15, 2016 and costing $16,000 (the election to expense is not made and no bonus depreciation was taken) ?

• A)$2,800
• B)$3,160
• C)$3,200
• D)$5,100
• E)$5,120

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Definitions:

Net Present Value

The disparity between the current value of cash coming in and the current value of cash going out over a certain time frame, employed in capital budgeting to evaluate an investment or project's profitability.

Independent Projects

Investment projects that do not affect each other’s outcomes or acceptability. Evaluating one does not impact the consideration of another.

Mutually Exclusive

Situations or decisions that cannot occur simultaneously; selecting one option precludes the choice of the other.

Net Present Value

The difference between the current value of cash inflows and the current value of cash outflows over a period of time; used to evaluate the profitability of an investment.