1) A new machine costs $35,000, and has a useful life of 10 years. Its estimated salvage value at the end of year 10 is $15,000.

(a) Determine the depreciation for years 1-10. You should do this in two ways: first using straight-line depreciation (with the salvage value of $15,000), and then using double-declining balance depreciation.

(b) Compute present worth of the two sequences of depreciation amounts. You can use a discount rate (minimum acceptable rate of return) of 10% annually.

(c) Use your answer to part (b) to help explain which depreciation method would be preferable for you?