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Homework5

Homework5 - Homework#5 ECH4604 Due Date Thursday October 4...

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Homework #5 ECH4604 Due Date: Thursday, October 4, 200 7 at 1PM in TA’s mailbox. The solutions will be uploaded on Thursday afternoon so that you have access to the solutions before the quiz. 1. Continuous compound interest is expressed as n m nom m n m i P F ) 1 ( lim + = . Using Taylor series, show this equation can be written as ) 1 ( eff i P F + = in order to have the relationship of 1 - = n i eff nom e i . 2. A company bought a heat exchanger for \$70,000. Using the Double Declining Balance method, calculate the depreciation allowance over the entire life of the equipment. Assume an equipment life of 5 years. 3. A company bought an asset at the beginning of 2001 for \$100,000. The company now has an offer to sell (salvage) the asset for \$60,000 at the end of 2002. For each of the depreciation methods shown below determine the capital loss or recaptured depreciation that would be realized for 2002. Note: Recaptured Depreciation and Capital Loss are equal to the difference between the Book Value (BV k ) and Salvage Value (S). If BV k > S you have a

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Homework5 - Homework#5 ECH4604 Due Date Thursday October 4...

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