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Unformatted text preview: Chapter 7 Problem Solutions for the Textbook: Economic Evaluation and Investment Decision Methods Eleventh Edition, 2006 Copyright 2006 Copyright by Investment Evaluations Corporation 3070 South Newcombe Way Lakewood, CO 80227 Microsoft Excel Spreadsheet File Note to Users: The solutions here are offered for your consideration. They are consistent in format, but vary somewhat from problem to problem. At first, some consideration was given to maintaining a consistent theme or style but such does not seem to be the norm when using spreadsheets to structure solutions to various problems. This variation in format also allows for consideration of the pro's and con's of different methodologies. John & Frank Stermole Excel™ is a registered trademark of Microsoft Corporation. Textbook Problem 71 All Dollar Values in Thousands MACRS & Straight Line Depreciation with HalfYear Convention 200% DB Switching to Straight Line Straight Line Depreciation Period Value Equation Form Value Equation Form Year 1 $2,000.00 $285.71 =B7*(2/7)*0.5 $142.86 =SLN(2000,0,7)/2 Year 2 $1,714.29 $489.80 =B8*(2/7) $285.71 =SLN(2000,0,7) Year 3 $1,224.49 $349.85 =B9*(2/7) $285.71 =SLN(2000,0,7) Year 4 $874.64 $249.90 =B10*(2/7) $285.71 =SLN(2000,0,7) Year 5 $624.74 $178.50 =SLN(B$11,0,3.5) $285.71 =SLN(2000,0,7) Year 6 $446.24 $178.50 =SLN(B$11,0,3.5) $285.71 =SLN(2000,0,7) Year 7 $267.75 $178.50 =SLN(B$11,0,3.5) $285.71 =SLN(2000,0,7) Year 8 $89.25 $89.25 =SLN(B$11,0,3.5)*(0.5) $142.86 =SLN(2000,0,7)/2 $2,000.00 =SUM(C7:C14) $2,000.00 =SUM(F7:F14) Use Table 73 to Calculate Depreciation Period Table 73 Values Amount Depreciation Taken Equation Form Year 1 0.14 $2,000.00 $285.80 =B21*C21 Year 2 0.24 $2,000.00 $489.80 =B22*C22 Year 3 0.17 $2,000.00 $349.80 =B23*C23 Year 4 0.12 $2,000.00 $249.80 =B24*C24 Year 5 0.09 $2,000.00 $178.60 =B25*C25 Year 6 0.09 $2,000.00 $178.40 =B26*C26 Year 7 0.09 $2,000.00 $178.60 =B27*C27 Year 8 0.04 $2,000.00 $89.20 =B28*C28 $2,000.00 =SUM(D21:D28) Textbook Problem 72 All Values in Thousands of Dollars Period Table 73 Values Amount Depreciation Taken Equation Form Year 1 0.250 $100.00 $25.00 =B38*C38 Year 2 0.250 $100.00 $25.00 =B39*C39 Year 3 0.167 $100.00 $16.67 =B40*C40 Year 4 0.083 $100.00 $8.33 =B41*C41 Year 5 0.083 $100.00 $8.33 =B42*C42 Year 6 0.083 $100.00 $8.33 =B43*C43 Year 7 0.083 $100.00 $8.33 =B44*C44 $100.00 =SUM(D38:D44) Remaining Depreciation Note that the SLN function is used as an alternative methodology to determine straight line depreciation. Excel also has declining balance, DB and double declining balance, DDB which compute accelerated depreciation deductions that are not based on current U.S. tax law. The methodologies of computation are unique along with failure to recognize the half year convention and the appropriate switching to the straight line method. Textbook Problem 73 All Dollar Amounts in Thousands MACRS & Straight Line Depreciation with MidQuarter Convention MACRS Light Trucks Purchased 1st Quarter...
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This homework help was uploaded on 04/09/2008 for the course EBGN 321 taught by Professor Johnm.stermole during the Fall '14 term at Mines.
 Fall '14
 JohnM.Stermole

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