For telecommunication services, Telenor has developed new computer units and 3D modeling software for its 100 affiliate site at a cost of Rs.4000 per site. The estimated SV for each system after 3 years is expected to be 5% of the initial cost. The franchise manager in the head office in Karachi wants to compare the depreciation for a 3 year MACRS model (tax depreciation) with that a 3-year DDB model (book depreciation). He is especially curious about the depreciation over next 2 years.

(a) Determine which model offers the larger total depreciation after 2 years.

(b) Determine the BV for each model after 2 years and at the end of the recovery period.