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Unformatted text preview: General instructions:
1. You may use a programmable calculator (scientific or financial type are all right), but NO NOTES.
2. If you think a problem is incompletely stated, make a typical assumption and continue working.
3. Show intermediate work and answers (if applicable) so that partial credit may be given.
4. Show intermediate work and answers (if applicable).
5. Show by example how you obtain each important item, e.g.:
ItemC = ItemA – (ItemB)(0.2) or 1 + 2 – 3 = 4 if the rows or columns are numbered
ItemF = max(ItemD, ItemE)
6. Put answers in places shown. If there is no place shown, circle or underline final answers.
7. You may round to the nearest dollar for intermediate and final answers.
For percentages, rates, and factors use an accuracy of four significant digits or more.
8. Here are some formulas and various interest tables.
There are some notes on depreciation and taxes, a MACRS % table, and federal tax table.
S hort
name F/P F = P(1 + i ) F/A Short
name N A [(1 + i )N  1 ] F= Interest factor formula P/F Interest factor formula P = F(1 + i )N A/F Fi A= (1 + i )N  1 i
P/A A [(1 + i )N  1 ] P= A/P P [i (1 + i )N ] A= i (1 + i )N
F/G F= (1 + i )N  1 G [(1 + i )N i N  1] P/G P= G [(1 + i )N i N  1]
i 2 (1 + i )N i2
A/G A= G [(1 + i )N i N  1] i annual = P/g,i P= (1 + i monthly )12  1 i (1 + i )N  i
F/g,i F= A 1 [(1 + i )N  (1 + g)N ] A 1 [1  (1 + g)N (1 + i ) i g i g The tables below do not contain factors for P/F, A/F, A/P, that are inverses of F/P, F/A, P/A.
i = 15%
i = 20%
N
1
2
3
4
5 F/P
1.1500
1.3225
1.5209
1.7490
2.0114 F/A
1.0000
2.1500
3.4725
4.9934
6.7424 P/A
0.8696
1.6257
2.2832
2.8550
3.3522 A/G
0
.46512
.90713
1.32626
1.72281 P/G
0
.75614
2.0712
3.7864
5.7751 N
1
2
3
4
5 F/P
1.2000
1.4400
1.7280
2.0736
2.4883 F/A
1.0000
2.2000
3.6400
5.3680
7.4416 P/A
0.8333
1.5278
2.1065
2.5887
2.9906 A/G
0
.45455
.87912
1.27422
1.64051 P/G
0
.69444
1.8519
3.2986
4.9061 6
7
8
9
10 2.3131
2.6600
3.0590
3.5179
4.0456 8.7537
11.067
13.727
16.786
20.304 3.7845
4.1604
4.4873
4.7716
5.0188 2.09719
2.44985
2.78133
3.09223
3.38320 7.9368
10.192
12.481
14.755
16.979 6
7
8
9
10 2.9860
3.5832
4.2998
5.1598
6.1917 9.9299
12.916
16.499
20.799
25.959 3.3255
3.6046
3.8372
4.0310
4.1925 1.97883
2.29016
2.57562
2.83642
3.07386 6.5806
8.2551
9.8831
11.434
12.887 11
12
13
14
15 4.6524
5.3503
6.1528
7.0757
8.1371 24.349
29.002
34.352
40.505
47.580 5.2337
5.4206
5.5831
5.7245
5.8474 3.65494
3.90820
4.14376
4.36241
4.56496 19.129
21.185
23.135
24.972
26.693 11
12
13
14
15 7.4301
8.9161
10.6993
12.8392
15.4070 32.150
39.581
48.497
59.196
72.035 4.3271
4.4392
4.5327
4.6106
4.6755 3.28929
3.48410
3.65970
3.81749
3.95884 14.233
15.467
16.588
17.601
18.509 ISyE3025_Exam3_NotesTables 2008.03.06 N ISyE 3025, These notes and tables will be made available to students as part of Exam 3.
1. The depreciation method. There are 5 methods covered in this course:
a. SL, for pre1981 purchases, you must reflect the estimated salvage value in computation.
Annual deprecation expense = (Purchase cost  estim. salvage value)/N.
b. SYD, for pre1981 purchases, you must reflect the estimated salvage value in computation.
Obtain the sum of the digits {1 + 2 + ... + N}. Create fractions: N/sum, (N1)/sum, ... , 2/sum, 1/sum.
Apply these fractions to (Purchase cost  estim. salvage value).
c. DB family for pre1981 purchases, ignore the estimated salvage value in computation,
but don’t allow the book value to get below it. Must know multiplier, usually 1.5 or 2.0
In contrast to SL and SYD, the DB method is applied iteratively to previous book value.
Obtain rate = (multiplier)(100%/N). D1 = (Purchase cost)(rate), BV1 = Purchase cost  D1 ,
D2 = BV1(rate), BV2 = BV1  D2 , D3 = BV2(rate), BV3 = BV2  D3 , etc.
d. MACRS % method, for post1986 purchases, ignore the estimated salvage value in computation.
This method is essentially a table lookup method. Generally preferred to option e.
e. MACRS alternate SL method, for post1986 purchases, ignore estimated salvage value in computation.
This method is easy to apply. It is required for some types of assets. 2. Full or partial year convention for depreciation.
a, b, c. Generally fullyear for SL, SYD, and DB for pre1981 purchases.
d. MACRS % method has halfyear built in.
e. MACRS alt. SL method: you must compute half for first and last years.
Other: We don’t cover midquarter convention in this course. 3. Premature sale of asset?
a, b, c. Don’t change the depreciation expense in year of sale for SL, SYD, and DB for pre1981 purchases.
d, e. For both MACRS methods one should take only half the normal depreciation expense in year of sale.
(Sale in last year of depreciation schedule is not considered premature.)
Annual depreciation percentages under MACRS specified percentages
method (with halfyear convention)
Recovery Recovery period or property class
Year
3year
5year
7year
10year
1
33.33
20.00
14.29
10.00
2
44.45
32.00
24.49
18.00
3
14.81
19.20
17.49
14.40
4
7.41
11.52
12.49
11.52
5
11.52
8.93
9.22
6
5.76
8.92
7.37
7
8.93
6.55
8
4.46
6.55
9
6.56
10
6.55
11
3.28
12
13
14
15
16
Corporate income taxes for U.S. corporations.
Range lower
Range upper
Range
limit, $
limit, $
50 000 Tax rate, %
15 15year
5.00
9.50
8.55
7.70
6.93
6.23
5.90
5.90
5.91
5.90
5.91
5.90
5.91
5.90
5.91
2.95 Tax computation, X is taxable income 1 0 0+ 0.15(X) 2 50 001 75 000 25 7 500 + 0.25(X  50 000) 3 75 001 100 000 34 13 750 + 0.34(X  75 000) 4 100 001 335 000 34 + 5 22 250 + 0.39(X – 100 000)
0.34(X – 335 000)
0.34(X) 5 335 001 10 000 000 34 113 900 +
OR 6 10 000 001 15 000 000 35 3 400 000 + 0.35(X  10 000 000) 7 15 000 001 18 333 333 35 + 3 5 150 000 + 0.38(X  15 000 000) 35 6 416 666 +
OR 0.35(X 18 333 333)
0.35(X) 8 18 333 334 ISyE3025_Exam3_NotesTables no limit 2008.03.06 ...
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This note was uploaded on 09/22/2009 for the course ISYE 3025 taught by Professor Lee during the Fall '09 term at Georgia Institute of Technology.
 Fall '09
 Lee

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