Your company has paid $150,000 for heat exchangers for use in petroleum drilling, which it believes will have $15,000 salvage value at the end of the 5-year useful life. Compute the depreciation schedule as indicate in the tables below. Straight-line Depreciation | Book Value | Depreciation | Book Value Year Double declining balance 0150 60% 36¢ 1 12)k 32.4 1944 12く 12.96 4.2584 4 Year 20% bonus + MACRS МАCRS Depreciation | Book Value | Depreciation Book Value Tsok 20 40 52 39,2 31/.52 1 ג כב 36.3k 2 3 E5.93K T8.024 ll.32 /58.334 11.52 3.76 711.52 4 5 12.34K 23.16 23

am. 105.

Your company has purchased a new piece of equipment for $1,000,000 and the equipment has a useful life of 5 years and uses the straight-line method of depreciation. It is estimated that labor costs and maintenance costs will be reduced by $500,000 per year for the next 5 years. Your company has a hurdle rate of 10%.   Calculate the Net Present Value (NPV) for the equipment purchase.   a) $895,000   b) $735,000   c) $525,000   d) $1,000,000   I got option a, I also think this is correct.

Question-based on, "Asset purchased"... Simple   I am confused about it and got an incorrect answer.