ENGR 301 - Assignment 7

Deadline: 23:59, Friday November 27, 2015

Assignments must be submitted online using the multiple choice answer sheet on
the Moodle course website. No submissions will be accepted after the deadline.

Question 7-1
Some special handling devices can be bought for $12,000. At the end of 4 years they can be sold for
$3,500. The book value of the assets after 3 years of depreciation using SOYD is close to:
$4510

$4180

$4420

$4350

Question 7-2
Manufacturing equipment was acquired for $12,000. The book value of this equipment after 3 years of
depreciation using declining balance with a rate of 30% is close to:
$5880

$4998

$7140

$4116

Questions 7-3 to 7-7

The depreciation schedule for certain equipment has been arrived at by various methods. The estimated
salvage value of the equipment at the end of its 7 year useful life is $700. Identify the resulting
depreciation schedules.
Year
1
2
3
4
5
6
7

A
$1,329
$1,329
$1,329
$1,329
$1,329
$1,329
$1,329

B
$2,325
$1,993
$1,661
$1,329
$ 996
$ 664
$ 332

C
$2,857
$2,041
$1,458
$1,041
$ 744
$ 531
S 379

D
$3,161
$2,162
$1,478
$1,011
$ 692
$ 473
$ 323

Question 7-3: Which scheme represents SOYD depreciation?

Question 7-4: Which scheme represents DB depreciation?

Question 7-5: The DB depreciation rate is close to?

25% 28% 32% 30%

Question 7-6: Which scheme represents SL depreciation?

Question 7-7: Which scheme represents DDB depreciation?

Question 7-8
Manufacturing equipment was acquired for $12,000. Determine the undepreciated capital cost of this
equipment after 3 years of depreciation using CCA depreciation as a Class 43 asset.
(Hint: Use the CCA classes and rates posted on the course website)
$5880

$4998

$7140

$4116

Question 7-9
On July 1, 2010 Sarah paid $100,000 for a greenhouse and an additional $50,000 for the land on which
the greenhouse stands. Compute the UCC at the end of year 2.
(Hint: Use the CCA classes and rates posted on the course website)
$100,200

$79,700

$85,500

$92,400

Question 7-10
Ten years ago a machine cost $800,000. Now, the same machine costs $1,200,000. Calculate the average
rate of inflation per year.
3.7%

5.0%

4.1%

4.6%

Question 7-11
An investor bought a tax-free provincial bond, at a cost of $1000 which will pay $50 interest each year for
20 years. The bond will mature in 20 years and return the original $1000. If there is a 2% annual inflation
during this period, what real rate of return will the investor receive?
2.9%

2.5%

3.2%

4.0%

Question 7-12
A composite price index for the cost of vegetarian foods called eggs, artichokes, and tofu (EAT) was 330
ten years ago and has averaged an annual increase of 12% since. Calculate the current value of the index.
480

618

877

1025