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Ferryman Example 2 (StraightLine Depreciation)
In 2004, Ferryman Company, a titanium producer in
Pennsylvania, expanded its operations with the
purchase of a $10 million rolling mill. Assume the
new mill was fired up at the start of 2005 and runs at
its peak capacity of 4 million pounds of output per
year for 10 years. Assume that each pound of output
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Unformatted text preview: generates $9.00 in revenues while costing $4.00 to produce. Assume that O&M costs are $10 million in 2005 and grow by $1 million per year after that. At the end of 10 years the mill will be sold for scrap for $500,000. Calculate the annual depreciation on the rolling mill using straightline depreciation. What is the book value at the end of 2007?...
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This note was uploaded on 12/07/2011 for the course CIVL 4111 taught by Professor Moore,l during the Fall '08 term at U. Memphis.
 Fall '08
 Moore,L

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