A small firm purchased a number of transportation trucks for 350,000. They expect a salvage value of 65,000 after 5 years and plan to depreciate it using (a) a straight-line depreciation method, or (b) a 150% declining balance method.

The companyexpects an annual averagegross income of $1,350,000and annual averageexpenses of $850,000 for each year. Comparethe company's present worth of annual taxes over a period of 5 years under the two methods for an interest rate of i=10% and effective tax rate of Te=35%.