Lec%2028_Full - IE 343 Engineering Economics Lecture 28:...

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IE 343 Engineering Economics Lecture 28: Chapter 7 - Depreciation and Income Taxes Instructor: Tian Ni Nov.2, 2011 IE 343 Fall 2011 1
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Exam 2 will be changed to Nov. 16 Wednesday 4:30PM – 5:20PM in class (50 Minutes) Homework 9 will be assigned Friday Nov. 4 and will be due next Friday Nov. 11. Homework 9 – Chapter 7; Homework 10 – Chapter 8, 9; Homework 11 – Chapter 9 Totally 11 Homework, and drop TWO lowest grades instead of ONE Final Exam: Monday Dec. 12, 10:20AM - 12:20PM, EE 129 IE 343 Fall 2011 Announcements 2
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11 th Week Oct.31 Nov.2 Nov.4 (Quiz7, Chapter7) (Chapter 7 & Hw8 due, HW9 out) 12 th Week Nov. 7 Nov.9 Nov.11 (Chapter7,8) (Chapter 8) (Chapter 8&HW9 due) 13 th Week Nov.14 Nov. 16 Nov. 18 (Review 2) (INFORMS&Exam 2) (Chapter9&HW10 out) 14 th Week Nov. 21 Nov. 23 Nov. 25 (Chapter9) (Thanksgiving) (Thanksgiving) 15 th Week Nov. 28 Nov. 30 Dec.2 (Chapter 9) (Chapter 9&Quiz8) (Chapter9 & HW10 due, HW11 out) 16 th Week Dec. 5 Dec.7 Dec. 9 (Chapter 9, Review (Review Chapter 9) (HW11 due & Final Chapter 1-8) Review) IE 343 Fall 2011 3
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IE 343 Fall 2011 Summary of Classical Depreciation methods Methodology Fully Depreciated? Depreciation Speed Straight-Line (SL) Method Constant depreciation deduction each year Yes Constant Declining-Balance (DB) Method Constant percentage depreciation deduction each year No Constant percentage DB with switchover to SL Method whenever the depreciation deduction in a year by DB method is lower than that of SL method, switch to SL method. Yes Between SL and DB Sum-of-years’- digits Method Proportional to the sum of year's digit Yes Constant Decreasing Rate Units-of- Production Method Depreciation is based on activity (number of units produced) rather than time. Yes Constant per unit 4
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Straight-Line (SL) method: Depreciation deduction is constant each year over the depreciable (useful) life of an asset. The asset is fully depreciated under the SL method IE 343 Fall 2011 Classical depreciation: Straight-Line (SL) 5 . , , 1 for , / ) ( * * N N k k k N k SV BV d k B d B BV N k d k d N SV B d d = × = = × = = =
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Declining-Balance (DB) method: DB method is also known as constant-percentage method or the Matheson formula. Annual depreciation deduction is a constant
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This note was uploaded on 01/28/2012 for the course IE 343 taught by Professor Vincent,g during the Winter '08 term at Purdue University-West Lafayette.

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Lec%2028_Full - IE 343 Engineering Economics Lecture 28:...

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