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Muntz Power Company uses the composite method and straight-line depreciation for its power plant equipment....

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Accounting

Muntz Power Company uses the composite method and straight-line depreciation for its power plant equipment. Its Apple River plant, which began generating electricity January 1, 2024, had the following equipment:

Equipment

Life (Years)

Estimated Cost

Residual Value

Turbines

25

$5,000,000

$500,000

Steam pipes

16

3,500,000

300,000

Furnace

20

6,500,000

250,000

Required: Show your work.

1. Compute the composite depreciation rate. Note: Round your answer to 2 decimal places.

2. Compute the average service life. Note: Round your answer to 1 decimal place.

3. Compute 2024 depreciation.

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