hw ch 11 nov 14

# hw ch 11 nov 14 - 1 40000 40000 60000 36364 2 24000 64000...

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#20 Earthmoving Equipment MARR = 10% 5 year useful life investment: 100,000 MACRS Year rate dep'n (\$) Total dep'n (\$) PW of total dep'n (\$) Book Value (\$) 1 0.2 20000 20000 20000 80,000 2 0.32 32000 52000 47273.2 48,000 3 0.192 19200 71200 58839.68 28,800 4 0.1152 11520 82720 62147.536 17,280 5 0.1152 11520 94240 64365.92 5,760 6 0.0576 5760 100000 62090 0 #26 i=10% Determine which method of depreciation would be preferable SV 20,000 Straight line: Year dep'n / year (\$) total dep'n (\$) BV (\$) PW of total dep'n (\$) 1 16000 16000 84000 14545.6 2 16000 32000 68000 26444.8 3 16000 48000 52000 36062.4 4 16000 64000 36000 43712 5 16000 80000 20000 49672 Double Declining Balance R= 0.4 Year dep'n / year (\$) total dep'n (\$) BV (\$) PW of total dep'n (\$)
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Unformatted text preview: 1 40000 40000 60000 36364 2 24000 64000 36000 52889.6 3 14400 78400 21600 58901.92 4 1600 80000 20000 54640 5 MACRS: See #20 PW of total dep'n = \$62,090 Based on these 3 values of PW of total dep'n, the best method would Based on these 3 values of PW of total dep'n, the best method would be MACRS. This is because it has the highest present worth. We want to depreciate the value the most and as quick as possible and this method gives us this. Also it assumes no salvage value, so when the investment is finally sold, we will actually have some gain...
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