A firm has invested $45,000 in machinery with a 5-year useful life, and an expected salvage value of $8,000 if kept for the full 5 years. The machinery has a market value of $15,000 when sold in its third year. The uniform annual benefits from the machinery are $18,000. The company has a combined 45% income tax rate. The machinery is considered a 5-year MACRS property. Assume the machinery is sold in the third year. What is the depreciation in year three? NOTE: This MACRS property class is different than question 2.

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

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