Q1.

A profitable company making earthmoving equipment is considering an investment of $100,000 on quipment that will have a 5-year useful life and a $20,000 salvage value. Use a spreadsheet func-tion to compute the MACRS depreciation schedule.

Show the total depreciation taken (=sum( )) as well

as the PW of the depreciation charges discounted at

the MARR%.

Q2

Luby's Cafeterias is in the process of forming a separate business unit that provides meals to facilities for the elderly, such as assisted care and long-term care centers. Since the meals are prepared in one central location and distributed by trucks throughout the city, the equipment that keeps food and drink cold and hot is very important. Michele is the general manager of this unit, and she wishes to choose between two manufacturers of temperature retention units that are mobile and easy to sterilize after each use. Use the cost estimates below to select the more economic unit at a MARR of 8% per year. Hamilton (H) Infinity Care (IC) Initial cost P, $ -15,000 -20,000 Annual M&O, $/year -6,000 -9,000 Refurbishment cost, $ 0 -2,000 every 4 years Trade-in value S, % of P 20 40 Life, years 4 12