Equipment was purchased for $15,000. Freight charges amounted to $700 and there was a cost of $2,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $3,000 residual value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be

1. $3,940

2. $3,340

3. $2,800

4. $2,860