A manufacturer of aerospace products purchased three flexible assembly cells for $500,000 each. Delivery and insurance charges were $35,000, and installation of the cells cost another $50,000. Solve, a. Determine the cost basis of the three cells. b. What is the class life of the cells? c. What is the MACRS depreciation in year five? d. If the cells are sold to another company for $120,000 each at the end of year six, how much is the recaptured depreciation?

A manufacturer of aerospace products purchased three flexible assembly cells for $500,000 each. Delivery and insurance charges were $35,000, and installation of the cells cost another $50,000. Solve, a. Determine the cost basis of the three cells. b. What is the class life of the cells? c. What is the MACRS depreciation in year five? d. If the cells are sold to another company for $120,000 each at the end of year six, how much is the recaptured depreciation?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 2E

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