Problem Scenario B (for Problems 7-8) A land development company purchases a grader at cost of $200,000. The annual interest rate is 6% and the annual O&M cost for the grader is $4,000. For tax purposes the company is using the MACRS depreciation method and they have determined that the grader falls into the 7-year property class. They hope to sell the grader for S40,000 at the end of 10 years. 7. Which of the following is closest to the depreciation deduction for year 2? (This is an FE Exam-style question - watch out for extraneous information.) a) $50,000 b) $40,000 c) $30,000 d) $20,000 8. Which of the following is closest to the book value at the end of year 4? a) $70,000 b) $60,000 c) $50,000 d) $40,000