Principles of Engineering Economic Analysis
6th Edition
ISBN: 9781118163832
Author: John A. White, Kenneth E. Case, David B. Pratt
Publisher: Wiley, John & Sons, Incorporated
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Question
Chapter 9, Problem 41P
a:
To determine
Defining the MACRS class..
b:
To determine
Calculate the depreciation value.
c:
To determine
Calculate the book value.
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Depreciation can be applied to machinery, equipment, vehicles, telephone, computers, furniture.
True or False
Which of the following is (are) required to calculate MACRSGDS depreciation deductions? I. Property Class II. Salvage Value III. First Cost IV. Annual Maintenance Costs a. I and III only b. II and III only c. I, II, and III d. I, II, III, and IV.
4. A firm purchased $120,000 worth of light general-
purpose trucks. The operations of the trucks lead
to annual income of $50,000 for years 1~4. These
trucks were then sold for $20,000 at the end of
year 4. Assume a 36% combined tax rate. With a
40% bonus depreciation plus MACRS
depreciation, do the following.
a)
Calculate the before-tax IRR.
(b)
Calculate the after-tax IRR.
Chapter 9 Solutions
Principles of Engineering Economic Analysis
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Similar questions
- An asset costs $150,000 and has a salvage value of $15,000 after 10 years.What is the depreciation charge for the 4th year, and what is the book value atthe end of the 8th year with(a)Straight-line depreciation?(b)Double declining balance depreciation?arrow_forward4. New equipment used in construction with a cost basis of $60,000 with a zero salvage value at the end of its useful life of 6 years. Use the Double Declining method to calculate the depreciation charge in year 4. $7,494 $2,633.75 $5,925.93 $10,000arrow_forwardDefine the term Depreciation?arrow_forward
- A company purchased new mining equipment in year 2018 by paying $400,000 cash. The company plans to keep the equipment for several years and use MACRS-GDS depreciation for tax purposes. Click the icon to view the partial listing of depreciable assets used in business. Click the icon to view the GDS Recovery Rates (k). Calculate the depreciation that the company claimed on the asset for year 2 of ownership. OA. $48,980 OB. $34,980 OC. $17,840 O D. $69,960 ○ E. $97,960 Calculate the book value of the asset at the end of year 2. OA. $365,020 OB. $293,860 OC. $209,900 More Info O D. $244,880 O E. $174,920 C More Info GDS Recovery Rates (r) for the Six Personal Property Classes Recovery Period (and Property Class) Year 3-year 5-year 7-year³ 10-year² 15-yearb 20-yearb 1 0.3333 0.2000 0.1429 0.1000 0.0500 0.0375 2 0.4445 0.3200 0.2449 0.1800 0.0950 0.0722 3 0.1481 0.1920 0.1749 0.1440 0.0855 0.0668 4 0.0741 0.1152 0.1249 0.1152 0.0770 0.0618 0.1152 0.0893 0.0922 0.0693 0.0571 0.0576 0.0892…arrow_forwardAn oil refinery has decided to purchase some new drilling equipment for $440,000. The equipment will be kept for 7 years before being sold. The estimated SV for depreciation purposes is to be $18,000. Using the SL method, what is the BV at the end of the depreciable life? Choose the correct answer below. A. The BV at the end of the depreciable life is $36,000. B. The BV at the end of the depreciable life is $44,857. C. The BV at the end of the depreciable life is $18,000. D. The BV at the end of the depreciable life is $0.arrow_forwardAn asset with a cost of $100,000 and accumulated depreciation of $80,000 is sold for $8000.What is the amount of the gain or loss on disposal of the plant asset?arrow_forward
- Does the recognition of depreciation expense affect cash flows? Why or why not?arrow_forward1. A company purchases an asset for P10,000 and plans to keep it for 20 years. If the salvage value is zero at the end of 20th year. What is the depreciation in the 3rd year using the SYD method? (10 Points) 937 1,000 747 857arrow_forwardCalculate the value of depreciation of gross value is $120 million and the net value is $100 millionarrow_forward
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