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I have a little bit of doubt about this solution. should depreciation be calculated on 80 million or on 30 million? the question says: Dunder

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I have a little bit of doubt about this solution. should depreciation be calculated on 80 million or on 30 million?

the question says: Dunder Mifflin is a paper manufacturer and distributor which is investing in a new line of paper. The company needs to buy the building for US$50 million and make an initial investment of US$30 million to convert the building into a plant. Expenses are incurred today (t=0). 10 years is the expected life of the plant. All the expenditures made for the plant today will be depreciated straight-line over 10 years (from year 1 to year 10) leaving behind a value of US$5 million, but the company believes it might be able to sell it off at US$10 million.

Workings: 1. Yearly Depreciation

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