Power to a remote transmitting station is provided by a Diesel-electriegenerator unit. The original cost of the unit is P65,000. It costs P2,000 to ship the unit to the job site. An additional cost of P3,000 was incurred for installation. (a) Determine, the annual depreciation cost by the straight line method, if the unit has an expected life of 10 years. The salvage value of the unit at the end of its life was estimated at P5,000. (b) Determine the annual depreciation cost by the sinking fund method. Assume that the annual charge for depreciation was deposited in a fund drawing compound interest at the rate of 5%

Power to a remote transmitting station is provided by a Diesel-electriegenerator unit. The original cost of the unit is P65,000. It costs P2,000 to ship the unit to the job site. An additional cost of P3,000 was incurred for installation. (a) Determine, the annual depreciation cost by the straight line method, if the unit has an expected life of 10 years. The salvage value of the unit at the end of its life was estimated at P5,000. (b) Determine the annual depreciation cost by the sinking fund method. Assume that the annual charge for depreciation was deposited in a fund drawing compound interest at the rate of 5%

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Description: Power to a remote transmitting station is provided by aDiesel-electriegenerator unit. The original cost of the unit is P65,000.It costs P2,000 to ship the unit to the job site. An additional cost ofP3,000 was incurred for installation,(a) Determine,

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Power to a remote transmitting station is provided by a Diesel-generator unit. The original cost of the unit is 65,000. It costs 2,000 to ship the unit to the job site. An additional cost of 3,000 was incurred for installation. (a) Determine the annual depreciation cost by the sinking fund method, if the unit has an expected life of 10 years. The salvage value of the unit at the end of its life was estimated at 5000. (b) Determine the annual depreciation cost by the sinking fund method. Assume that the annual charge for depreciation was deposited in a fund drawing compound interest at the rate of 5%.
A solar panel unit has been purchased by a company for electricity back up. The solar unit costs P70,000 alone. Additional payment of P5,000 pesos has been made for shipment and P3,000 for installation. a. if the unit has an expected life of 12years, what is annual depreciation cost by the straight-line(SL)depreciation method. The salvage value was estimated at P5000at the end of unit’s life. b.Using sinking fund method, determine the annual depreciation cost. It is assumed that the annual charge for depreciation was deposited in a fund with a 6% compounded monthly.
Two different types of hydraulic equipment are being considered for a certain power plant. Machine A has a first cost of P15,000, and a salvage value of P1,500, life is 6 years and has an annual maintenance an operating cost of P900. Machine B has a first cost of P18,000, life of 8 years with no salvage value. Annual operating cost is P750. Which machine would be used to justify the purchase of such machine if money is worth 7% and compute the difference between its equivalent present worth? Show solutions.
An assembly line conveyor system with a 5-year life is to be depreciated by the DDB method. The conveyor units had a first cost of $30,000 with a$9000 salvage value. The annual operating cost allocated to the conveyor is $7000 per year. The book value at the end of year 2 is closest to:a. $6,480b. $10,800c. $12,400d. $18,000
A machine costs RO 40,000 with a salvage value of RO 20,000. The expected life of the machine is 38000 hours in six years. In the first year, the machine is used for 4000 hours. In the second year, 6000 hours and 8000 hours on the third year. What is the depreciation at the end of the second year by using units of production method? a.RO 5120 b.RO 4160 c.RO 2080 d.RO 3120
The initial cost of a paint sand mill, including its installation is P 700,000.00 . The BIR approved life of this machine is 19 years of depreciation. The estimated salvage value if the mill os P 8,000.00 and the cost of dismantling is estimated to be P 5,000.00 . Using straight line depreciation, what is the book value of the machine at the end of 6 years?
A construction company has purchased a motor for P20,000 and a generator for P8,000 to produce its own energy to meet electricity demands in the construction site. The assembly of the motor-generator set-up costs P5,000. The service will operate for 10 years, 1,600 hours per year. The maintenance cost is P1,200 per year, and the cost to operate is P5per hour for fuel and other costs. The salvage value at the end of ten years is equal to P1,000. Using straight-line depreciation, what is the annual cost of operation?
A construction company has purchased a motor for P20,000 and a generator for P8,000 to produce its own energy to meet electricity demands in the construction site. The assembly of the motor-generator set-up costs P5,000. The service will operate for 10 years, 1,600 hours per year.The maintenance cost is P1,200 per year, and the cost to operate is P5 per hour for fuel and other costs. The salvage value at the end of ten years is equal to P1,000. Using straight line depreciation, what is the annual cost of operation?
A solar panel unit has been purchased by a company for electricity back up. The solar unit costs P70,000 alone. Additional payment of P5,000 pesos has been made for shipment and P3,000 for installation. a. if the unit has an expected life of 12 years, what is annual depreciation cost by the straight-line (SL) depreciation method. The salvage value was estimated at P5000 at the end of unit’s life. b. Using sinking fund method, determine the annual depreciation cost. It is assumed that the annual charge for depreciation was deposited in a fund with a 6% compounded monthly.
A construction company has purchased a motor for P20,000 and a generator for P8,000 to produce its own energy to meet electricity demands in the construction site. The assembly of the motor- generator set-up costs P5,000. The service will operate for 10 years, 1,600 hours per year. The maintenance cost is P1,200 per year, and the cost to operate is P5 per hour for fuel and other costs. The salvage value at the end of ten years is equal to P1,000. depreciation is considered as one of the operating costs, Use straight line depreciation, then calculate and determine the annual cost of operation.
Albertus Natural Stone Quarry purchased a computer-controlled face-cutter saw for $80,000. The unit has an anticipated life of 5 years and a salvage value of $10,000. (a) Compare the schedules for annual depreciation and book value using two methods: DB at 150% of the straight line rate and at the DDB rate. (b) How is the estimated $10,000 salvage value used?
رA machine costs RO 40,000 with a salvage value of RO 20,000. The expected life of the machine is 38000 hours in six years. In the first year, the machine is used for 4000 hours. In the second year, 6000 hours and 8000 hours on the third year. What is the depreciation at the end of the second year by using units of production method? a. RO 5120 b. RO 3120 c. RO 2080 d. RO 4160

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