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Massey Machine Shop recently purchased a machine for $750,000. The firm paid a $40,000 installation...

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Finance

Massey Machine Shop recently purchased a machine for $750,000. The firm paid a $40,000 installation fee. The machine is to be depreciated using 3-year recovery period class MACRS depreciation. What will the book value of the machine be at the end of three years? (2 points)

750,000 + 40,000 = 790,000

MACRS depr rates: year 1 is 33%, year 2 is 45% , year 3 is 15%, year 4 is 7%

At the end of 3 years, book value is .07 * 790,000 = $55,300

I need an explanation of how did they get the 33%, 45%, 15% and 7% !!! is there a formula or a rule to follow!! if the numbers on the question changed! will these percentages change too?

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