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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?

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