During 2013,Duncan Company Purchases and Places in Service Office Equipment

question 18

Multiple Choice

During 2013,Duncan Company purchases and places in service office equipment with a cost of $40,000.The equipment is 7-year MACRS property with an ADS recovery period of 10 years.Duncan desires to avoid the AMT.What is its minimum 2013 depreciation deduction?

• A)$ 2,000
• B)$ 2,857
• C)$ 3,000
• D)$ 4,000
• E)$ 5,714

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Definitions:

Marginal Propensity

The fraction of an additional unit of income that is spent on consumption rather than being saved.

Consumption Function

The relationship in the economy between consumption and income, other things constant.

Saving Function

The relationship between the level of saving and the level of income, typically showing that saving increases as income increases.