Ferryman Example 2 (Straight-Line Depreciation)

# Ferryman Example 2 - 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

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Ferryman Example 2 (Straight-Line 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 straight-line 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.

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