Declining Balance with Conversion to Straight-Line Depreciation (BN> S)
Suppose the asset given in Example 9.4 has a zero salvage value instead of $778; that is,
Cost basis of the asset, I = $10,000
Useful life, N = 5 years,
Salvage value, S = $0,
a = (1/5)(2) = 40%.
Determine the optimal time to switch from DB to SL depreciation and the resulting depreciation schedule.