An oil refinery has decided to purchase some new drilling equipment for $550,000. The equipment will be kept for 10 years before being sold. The estimated salvage value (SV) for depreciation purposes is to be $25,000

a) If SL depreciation is used and the equipment is sold for $35,000 at the end of the 10 years, the taxable gain (capital gain) on the disposal of the equipment is _________________.

b) If a MACRS depreciation schedule is used (based on a 5-year property class*) and the equipment is sold for $35,000 at the end of the 10 years, the taxable gain (capital gain) on the disposal of the equipment likely to be _________________. (Percentages: 20.00, 32.00, 19.20, 11.52, 11.52, 5.76)

Please provide all the steps taken and the formulas used to get to each step