A contractor acquires truckmounted concretepumping equipment

A contractor acquires truck-mounted concrete-pumping equipment. Owing to the initial and operating costs, the contractor is in doubt as to the preferred method for charging deprecia tion. The contractor considers three methods: straight line, MACRS, and units of production 4.25 The facts are as follows: initial cost, $1,400,000; useful life, 10 years; and a 20% salvage value. Production output starts at 200 ydVhr for a billing year of 2000 hr. It is estimated that the pumping rate will decline 10 yd\'hr each year For the data, plot the book value of the asset against time for the methods and select the best choice. Discuss the merits of these allocation schemes (Hint The best choice is the min- imum book value as time procceds, thus minimizing taxable income)

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