Increasing ROI over Time; Accelerated Depreciation (LO 2, 4, 5)
Refer to Exhibit 13- 3. Prepare a similar table of the changing ROI assuming the following accelerated depreciation schedule. Assume the same income before depreciation as shown in Exhibit 13–3 . (lf there is a loss, leave the ROI column blank.)
Year | Depreciation |
1 | $200,000 |
2 | 120,000 |
3 | 72,000 |
4 | 54,000 |
5 | 54,000 |
Total | $500,000 |
Required:.
1. How does your table differ from the one in Exhibit 13–3? Why?
2. What are the implications of the ROI pattern in your table?
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