Question
A company is considering buying a new machine, two different models are avaliable.. Model 1 Useful life- 20 years First cost- 80,000$ Salvage Value- 20,000$
A company is considering buying a new machine, two different models are avaliable..
Model 1
Useful life- 20 years
First cost- 80,000$
Salvage Value- 20,000$
Annual Operate Cost- 18,000 (1-20 years)
Model 2
Useful life- 25 years
First cost- 100,000$
Salvage Value- 25,000$
Annual Operate Cost 15,000$ (1-10 years) 20,000$ (11-25 years)
Assuming straight line deprecation, what is the book value of model 2 at the end of year 7?
73k 76k 79k or 82k
Asuming double declining balance deprecation, what is the book value of model 1 at the end of year 3?
64800 58370 52488 or 47239?
Please inlcude all formulas and clear step by step process!
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