The straight line method of depreciation says there will be a set amount of depreciation each year. For this problem we will need to know what the starting value is, what the residual value is (the lowest amount it can get to) and how many years the machinery will be in use. I am not sure what the $450K is, starting or residual, but lets suppose it is starting, with a residual value of 0 and a 9 year life. (Starting Value - Residual Value) / Life = SLM Depreciation per year. (450,000-0)/9 = $50,000 The residual value tells you that the machinery cannot be depreciated less than 0.
