Solution 16.30

The manager of a plant that manufactures stepper drives knew that MACRS and DDB were both accelerated depreciation methods, but out of curiosity, he wanted to know which one would provide the faster write-off in the first 3 years for equipment that has a first cost of $300,000, a 5-year life, and a $60,000 salvage value. (a) Use hand calculations to determine which method yields the lower book value and by how much.