ARKO oil company purchased two large compressors for
$125,000 each. One compressor was installed in the firm’s Texas refinery and is
being depreciated by MACRS depreciation. The other compressor was placed in the
Oklahoma refinery, where it is being de- . preciated by sum-of-years’ -digits
depreciation with zero salvage value. Assume the company pays federal income
taxes each year and the tax rate is Constant. The corporate accounting
department noted that the two compressors are being depreciated differently and
wonders whether the corporation will wind up paying more income taxes over the
life of the equipment as a result of this. What do you tell them?