A city has purchased a new asphalt paving machine for $300,000. The city comptroller states that the machine will be depreciated using a stright line method. At the end of 8 years, the machine will be sold with an expected salvage value of 60,000. a. Determine the function V = f(t) which expresses the book value of the machine V as a function of its age t. b. What is the book value expected to be when the machine is 6 years old?
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A city has purchased a new asphalt paving machine for $300,000.
The city comptroller states that the machine will be depreciated
using a stright line method. At the end of 8 years, the machine
will be sold with an expected salvage value of 60,000.
a. Determine the function V = f(t) which expresses the book
value of the machine V as a function of its age t.
b. What is the book value expected to be when the machine is 6
years old?
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- Cisco Systems is purchasing a new bar code scanning device for its service center in San Francisco. The table on the right lists the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is expected to be about 22% of the hardware cost. a. What is the cost basis of the device? b. What are the annual depreciations of the device if (i) the SL method is used? (ii) the 150% DB method is used? (iii) the 200% DB method is used? c. Calculate the book values of the device at the end of 4 years using all the methods above. Answers: (a) The cost basis of the device is $ (Round to the nearest dollar) (b) Annual depreciaitions and book values: (Round to the nearest dollar) 200% DB Year 1 2 3 4 Book values at end of year 4 SL 150% DB (...) 0 Cost Item Hardware Training Installation Cost $165,000 $15,000 $15,000Cisco Systems is purchasing a new bar code - scanning device for its service center in San Francisco. The table on the right lists the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is expected to be about 23% of the hardware cost. a. What is the cost basis of the device? b. What are the annual depreciations of the device if (i) the SL method is used? (ii) the 150% DB method is used? (iii) the 200% DB method is used? c. Calculate the book values of the device at the end of 4 years using all the methods above. Answers: (Round to the nearest dollar) (a) The cost basis of the device is $ (b) Annual depreciaitions and book values: (Round to the nearest dollar) Year 1 2 3 4 Book values at end of year 4 SL 69 69 69 69 69 150% DB 69 $ $ 200% DB 69 69 69 12 Cost Item Hardware Training Installation Cost $160,000 $16,000 $17,000Mansour, a farmer in BaniSweif, is considering the purchase of a new soil cultivating machine, either the type A or B. The minimum acceptable rate of return is 0.08. The table below provides all the necessary information for the two types. A B Initial Cost Annual Operation and Maintenance cost $6700 $16900 $1500 $1200 Annual Benefit $4000 $4500 $1000 $3500 Salvage Value Useful Life, in years 3 6 Determine the rate of return on machine A What is the incremental rate of return (M/c B - M/c A)? Using the above analysis, decide which machine should be bought: 1 for Machine A 2 for Machine B
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