2. XYZ Machining Inc. is considering the purchase of a new milling machine at a cost of $18,000.

The machine is expected to have a

service life

of eight years and a salvage value of $2,500. Develop

the complete depreciation schedule for the machine

showing year-by-year depreciation charges

and book values, and determine the present worth of all the depreciation charges assuming an

interest rate of 10% per year, using:

(a) MACRS depreciation,

(b) DDB depreciation.

[Answers: (a) 13,919 (b) 12,257]