Answer the following multiple-choice question. You have to
select the correct option and provide a complete correct solution.
Correct option is (iii).
DB method ignores salvage value.
Straight-line (SL) depreciation rate = 1 / Useful life = 1 / 8 = 0.125
150% DB depreciation rate = 1.5 x SL rate = 1.5 x 0.125 = 0.1875
150% DB depreciation schedule as follows.
Year | Beginning-of-year Book Value ($) | Depreciation Rate | Annual Depreciation ($) | Accumulated Depreciation ($) | End-of-Year Book Value ($) |
1 | 20,000 | 0.1875 | 3,750 | 3,750 | 16,250 |
2 | 16,250 | 0.1875 | 3,047 | 6,797 | 13,203 |
3 | 13,203 | 0.1875 | 2,476 | 9,272 | 10,728 |
4 | 10,728 | 0.1875 | 2,011 | 11,284 | 8,716 |
5 | 8,716 | 0.1875 | 1,634 | 12,918 | 7,082 |
Answer the following multiple-choice question. You have to select the correct option and provide a complete...
b. [7.5 marks] A small pump costs $20,000 and has a life of eight years. The pump will have a $4,000 SV at that time. If the 150% DB method is used to depreciate the pump, the BV at the end of year five is approximately equal to i. $5,000 ii. $6,000 iii. $7,000 iv. $8,000
Answer the following multiple-choice question. You have to
select the correct option and provide a complete correct
solution.
c. The city council is considering the purchase of a new fire truck. The capital investment is $50,000 and the maintenance expenses per year are $6,000. The fire truck has a life of six years and by using this truck there will be an annual reduction in fire damage of $20,000. If the MARR is 12% per year, what is the modified...
Answer the following multiple-choice question. You have to
select the correct option and provide a complete correct
solution.
d. A remotely situated fuel cell has an installed cost of $2,000 and will reduce existing surveillance expenses by $350 per year. The border security agency's MARR is 10%. What is the approximate minimum useful life that makes the fuel cell purchase break even? i. 8.52 ii. 8.63 iii. 8.77 iv. 8.89
Answer the following multiple-choice questions. You have to
select the correct option and provide a complete correct
solution.
Q1. a. A supermarket chain buys loaves of bread from its supplier at $0.5 per loaf and sells them at $0.75 per loaf. The chain is considering two options to bake its own bread. Capital investment Useful life (Years) Annual fixed costs Machine A $8,000 7 $2,000 Machine B $12,000 7 $3,500 Neither machine has a market value at the end of...
Answer the following multiple-choice question. You have to
select the correct option and provide a complete correct
solution.
e. The production rate of a company (D) could be 100 units per year with a probability of 0.4 or 125 units per year with a probability of 0.6. Moreover, the profit per unit sold (S) is either $5 with a probability of 0.35 or $7 with a probability of 0.65. What are the expected value and the standard deviation of the...
a. A supermarket chain buys loaves of bread from its supplier at $0.5 per loaf and sells them at $0.75 per loaf. The chain is considering two options to bake its own bread. Capital investment Useful life (Years) Annual fixed costs Machine A $8,000 7 $2,000 Machine B $12,000 7 $3,500 Neither machine has a market value at the end of seven years, and MARR is 10% per year. If the demand for bread at this supermarket is 20,000 loaves...
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