A company has decided to purchase a highly specialized computer system and needs to decide which depreciation method should use. Using the estimates provided for the computer system, answer the questions presented below.

First cost =	$500,000
Salvage value =	$50,000
Estimated life (years) =	5
Market value (year 3) =	$200,000
MARR =	10%

What is the first-year depreciation using the straight-line method?
What is the second-year depreciation using the double declining balance (DDB) method?
What is the third-year depreciation using the MACRS method?
Which method would you recommend the company to use to depreciate this asset?
When the asset is sold after three years of use, determine if there is a depreciation recapture, a loss or a capital gain and of how much using the depreciation method recommended on the previous question.