Answer:
The correct answer is $2,637.31.
Explanation:
According to the scenario, the computation of the given data are as follows:
Cost of machine = $6,000
According to MACRs table depreciation for first 3 years are as follows:
Depreciation for 1st year = 20%, for 2nd year = 32% and for 3rd year = 19.2%
So, Cost of machine after 1st year = $6,000 - 20% × $6,000 = $6,000 - $1,200
= $4,800
Cost of machine after 2nd year = $4,800 - 32% × $4,800 = $4,800 - $1,536
= $3,264
Now, Cost of machine after 3rd year = $3,264 - 19.2% × $3,264
= $3,264 - $626.688 = $2,637.312
So, the book value at the end of three years = $2,637.31
