Depreciation Choices and Outcome. Mulligan Co. purchased a new machine on January 1. The following information pertains to the purchase: 5 years $3,000 18,000 1,000 Life of asset Salvage value Purchase price Sales tax Freight cost Electrical set-up Custom programming Estimated annual labor savings Additional revenue generated 800 700 500 3,500 8,000 a. Determine the capitalized cost of the new machine $ b. Compute annual depreciation, accumulated depreciation and the machine's book value for the first three year assuming: i. Straight-line depreciation ii. Double-declining-balance method Straight-Line Depreciation Double-Declining Balance Depreciation Accumulated Book Value at Depreciation Accumulated Book Value at Expense Depreciation Year-end Expense Depreciation Year-End Year 1 $ Year 2 Year 3 C. Assume the machine is sold for $8,000 at the end of the third year after depreciation has been calculated. Determine the gain or loss assuming: i. Straight-line depreciation ii. Double-declining balance method Do not use negative signs with your answers below. Gain or Loss Amount Straight-line $ Double-declining $ d. Given your answer in part c, if Mulligan was able to perfectly predict the future that the machine would be sold for $8,000 at the end of the third year, which depreciation method should Mulligan choose? Ignore taxes. OMulligan's overall cash flow results would be greater if the straight-line method is used. OMulligan's overall cash flow results would be greater if the double-declining method is used. OMulligan's overall cash flow results would be the same with either depreication methods