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Consider the following data on an automobile: Cost basis of the asset (I) = $200,000; Useful life (N) = 4 years; Estimated salvage value (S)

Consider the following data on an automobile:

Cost basis of the asset (I) = $200,000;

Useful life (N) = 4 years;

Estimated salvage value (S) = $0

Determine the optimal time to switch from double-declining balance to straight-line depreciation and the resulting depreciation schedule (depreciation allowances and book values.)

Year Dn (DDB) Bn (DDB) Dn (SL) Bn (Final)
0
1
2
3
4

What year should you switch?

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