Question
Seaway Corporation is considering the purchase of a new cargo ship, which will cost a total of $4 million. The tax authority approves that the
Seaway Corporation is considering the purchase of a new cargo ship, which will cost a total of $4 million. The tax authority approves that the new cargo ship can use the accelerated depreciation: the firm can depreciate 20% of the value of the cargo ship right after the purchase, and depreciate 40%, 15%, 10%, 10% and 5% in the next 5 years, due to technical reasons, the cargo ship is worthless after 5 years. According to a special tax policy, the marginal tax rate for seaway Corporation will be 10% in the above period. Calculate the annual depreciation expense from year 0 to year 5.
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