ch 7 sol

ch 7 sol - Chapter 7 Problem Solutions for the Textbook...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

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 7-1 All Dollar Values in Thousands MACRS & Straight Line Depreciation with Half-Year 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 7-3 to Calculate Depreciation Period Table 7-3 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 7-2 All Values in Thousands of Dollars Period Table 7-3 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 7-3 All Dollar Amounts in Thousands MACRS & Straight Line Depreciation with Mid-Quarter Convention MACRS Light Trucks Purchased 1st Quarter...
View Full Document

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.

Page1 / 12

ch 7 sol - Chapter 7 Problem Solutions for the Textbook...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online