Question
Tinney & Smyth Inc. is considering the purchase of a new batch polymer-bonding machine for producing Crazy Rubber, a children's toy that is soft, pliable
Tinney & Smyth Inc. is considering the purchase of a new batch polymer-bonding machine for producing Crazy Rubber, a children's toy that is soft, pliable but also bouncy. The machine will increase EBITDA by $215,000 per year for the next two years. Assume that operating cash flows occur at the end of each year. The machine's purchase price is $260,000 and the salvage value at the end of two years is $46,800. The machine is classified as 3-year property. To run the Crazy Rubber production line the company will need to purchase an inventory of polydimethylsiloxane and boric acid for a total cost of $15,000. The MACRS depreciation rates for the first two years are 33.33% and 44.45%. What is the book value of the machine at the end of the second year of operations?
Calculate the depreciation schedule for 2 years below:(Round to the nearest dollar.)
| Depreciation Schedule | ||
| Year 1 | Year 2 | |
| Original Cost ( Basis) | $ | $ |
| MACRS Rates ( 3- year) | 0.3333 | 0.4445 |
| Accumulated Depreciation | $ | $ |
| Ending Book Value | $ | $ |
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