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Assignment 11

Assignment 11

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Published by: Grid G. on Jul 16, 2010
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Engineering Economy255330Assignment 11
Chapter 16
Depreciation Methods
Due Date:
16.10 Home Health Care, Inc. (HHCI) purchased a new sonargram imaging unit for $300,000 and hadit mounted on the truck body for an additional $100,000, including the truck chassis. The unit-track system will be depreciated as one asset. The function life is 8 years, and salvage isestimated at 10% of the purchase price of the imaging unit. (a) Use classical straight linedepreciation, and hand calculations to determine the salvage value, annual depreciation, andbook value after 4 years. (b) Develop the cell reference worksheet in excel to obtain the answer in part (a) for the original data. (c) Use your Excel worksheet to determine the answer, if thesonargam unit cost goes up to $350,000 and the expected life is decreased to 5 years. ((a) S =$30,000 , D
t
= $46,250 , BV
4
= $215,000 ,(c) S = $35,000 ,D
t
= $83,000 , BV
4
= $118,000)16.14 A special-purpose computer workstation has B=$50,000 with a 4-year recovery period. Tabulateand plot the values for SL depreciation, accumulated depreciation, and book value for each year if (a) there is no salvage value and (b) S = $16,000.16.19 A warehouse costs $800,000 to construct for Ace Hardware. It has a 15-year life with anestimated resale value of 80% of the construct cost. However, the building will be depreciated tozero over a recovery period of 30 years. Calculate the annual depreciation charge for year 5,10,and 25, using (a) straight line depreciation and (b) DDB depreciation. (c) What is the impliedsalvage value for DDB? ((a) D
t
= $26,667 ,(b) D
5
= $40,472, D
10
= $28,664, D
25
= $10,183,(c) D
30
= 100,959 )16.20 Allison and Carl are civil engineers who own a soil and water analysis business for which theyhave purchased computer equipment for $25,000. They do no expect the computers to have apositive salvage or trade-in value after the anticipated 5-year life. For book depreciationpurposes, they want book value schedules for the following methods: SL, DB, and DDB. Theywant to use a fixed depreciation rate of 25% annually for the DB model. Use a spreadsheet or hand computation to develop the schedules.16.36
 
 A highway construction company has operated a quarry for the past 5 years. During this timethe following tonnage has been extracted each year: 60,000; 50,000; 58,000; 60,000; and

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