# accounting

Van Meter Company is considering the purchase of the following computer equipment, which is considered 5-year property for tax purposes:
Acquisition cost \$500,000
Annual cash flow \$180,000
Annual operating costs \$30,000
Expected salvage value \$-0-
Cost of capital 12%
Tax rate 40%

Van Meter plans to use MACRS and keep the production equipment for seven years. (Round amounts to dollars.)

The MACRS deduction in Year 2 would be

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