Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 49

A sand and gravel pit purchased for $900,000 is expected to yield 50,000 tons of gravel and 80,000 tons of sand per year. The gravel will sell for $6 per ton and the sand for $9 per ton.
a) Determine the depletion charge according to the percentage depletion method. The percentage depletion rate for sand and gravel is 5%.
b) If taxable income is $100,000 for the year, is this depletion charge allowed If not, how much is allowed