Fred's Fabrication, Inc. bought a 50-kilowatt gas turbine that costs $40,000. It is estimated that the machine will have a depreciated salvage value of $5,000 at the end of its 3 - year useful life. Use the double-declining balance method:

a. Calculate the annual depreciation allowances. (Please ignore the depreciation adjustment at this time)

b. Calculate the annual book values. (Please ignore the depreciation adjustment at this time)

c. What do you notice about the book value at the end of year 5? What does this mean?