PS Builders Co purchases a new excavator costing £48,000. Its expected useful life is ten years, at which point it is anticipated that the excavator will have a residual value of £9450. If the reducing-balance method of depreciation is used, applying an annual depreciation rate of 15%, what is the annual depreciation charge in Year 2? O A. £4,000 OB. £6,120 OC. £4,400 O D. £5,610

PS Builders Co purchases a new excavator costing £48,000. Its expected useful life is ten years, at which point it is anticipated that the excavator will have a residual value of £9450. If the reducing-balance method of depreciation is used, applying an annual depreciation rate of 15%, what is the annual depreciation charge in Year 2? O A. £4,000 OB. £6,120 OC. £4,400 O D. £5,610

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section9.A: Depreciation

Problem 1P

See similar textbooks

Similar questions

An investment of P135 000.00 is being considered for a new lathe machine. Estimated economic life of the lathe is 12 years with a salvage value of P10 000.00. Projected annual income and expenses for the investment are P80 000.00 and P30 000.00, respectively. Using an MARR of 15% compounded annually and applying PW analysis, determine if the lathe should be purchased. (Ans. Purchase is justified, P137 900.00)
Subject : Accounting Samson Ltd is considering replacing equipment. The cost on 1.1.2023 will be £3m. The expected economic life of the equipment will be 4 years. The company depreciates its equipment using the straight-line methods. The company expects to sell this equipment for £400,000, after the end of its useful economic life. There are expected cost savings arising from this investment of £1,200,000 in each of years 1 and 2 and £800,000 in each of years 3 and 4. What is the payback of this investment? Select one answer: 2 years 3 years 2 years and 9 months 3 years and 2 months
A sala set is costs P80,000. Its estimated scrap value is P5,000 after 3 years. Solve for the constant depreciation per year(d) with 6% interest rate.Use Sinking Fund Method
The company buys a solar panel unit for P105,000. The shipping and installation fees amount to P15,000. If the unit is expected to last for 15 years, with a salvage value of P3,000, what is the depreciation charge during the 12 th year, and the book value at the end of 14 years by the (a) Declining balance method, (b) DDB method, (c) sinking fund method g iven interest rate at 12.5 percent, and (d) Sum-of-the-Years Digit (SYD) Method.
An asset which has a first cost of RM 40,000 is expected to have an annual operating cost of RM 15,000 per year. It will provide the needed service for a maximum of 6 years. If the salvage value changes as shown below , determine the economic life of the asset at 20 % per year.
A company is considering purchasing a machine for P210,000. The machine will generate an after-tax net income of P20,000 per year. Annual depreciation expense would be P15,000. What is the payback period for the new machine? Group of answer choices 10.5 years. 6 years. 42 years. 4 years. 14 years.
A company buys a £300 computer in Year 1 and capitalizes the expenditure. Th e computer has a useful life of three years and an expected salvage value of £0, so the annualdepreciation expense using the straight-line method is £100 per year. Compared to expensing the entire £300 immediately, the company’s pretax profit in Year1 is £200 greater.1. Assume that the company continues to buy an identical computer each year at thesame price. If the company uses the same accounting treatment for each of the computers, when does the profit-enhancing eff ect of capitalizing versus expensing end?2. If the company buys another identical computer in Year 4, using the same accounting treatment as the prior years, what is the eff ect on Year 4 profits of capitalizingversus expensing these expenditures?
A buffing machine is costs P10,000. Its estimated scrap value is P1,000 after 10 years. Solve for the constant depreciation per year(d) with 7% interest rate.Use Sinking Fund Method
A machine costs P1,800,000. It has a salvage value of P300,000 at the end of 5 years. If money is worth 6% annually, determine the starting depreciation charge using double-declining balance method.
The initial cost of a paint sand mill, including its installation is P806,875. The mill will last for 26 years, and the book value is P665,743 at the end of 12 years. The interest rate is estimated to be 9.962%. If the Sinking- Fund method of depreciation is used, determine the following: A. Total depreciation at the end of its life B. Book value at the end of 17 years C. Year at which the book value is half of its original price
A furnace has an initial investment of $ 58,000 AND a recovery value after 7 years of 12.5% of your initial investment. The depreciation method to use is the double declining balance method. What will the depreciation charge be each year?
Pamantasan ng Lungsod ng Maynila buys a solar panel unit for P105,000. The shipping and installation fees amount to P15,000. If the unit is expected to last for 15 years, with a salvage value of P3,000, what is the depreciation charge during the 12 th year, and the book value at the end of 14 years by the (a) Declining balance method, (b) DDB method, (c) sinking fund method g iven interest rate at 12.5 percent, and (d) Sum-of-the-Years Digit (SYD) Method.