Module 2 and 3 Ot

CW2
A corporate jet costs $1,350,000 and will incur $200,000 per year in fixed cost (maintenance,
…) and $277 per hour variable cost (fuel, …). The jet will be operated 1200 hours per year for 5
years and then sold for $650,000. The jet revenues $1,000 per hour. The MARR is 15% per
year.
Determine the Capital Recovery (CR) value of the jet.
Answer: 306,320.89
Answer range: 0.1
year.
Determine the Annual Worth (AW) of the jet.
Answer: 361,279.11
Answer range: 0.1
year.
Determine the Equivalent Uniform Annual Cost (EUAC) of the jet.
Answer: 838,720.89
Answer range: 0.1
LQ2
Question 1
A county will invest $4,200,000 to clean up a chemical spill that occurred following a natural
disaster. At the end of the 9-year planning horizon, an additional $1,000,000 will be spent in
restoring the site to an environmentally acceptable condition. The investment is expected to
produce net annual benefits that will decrease by 24% each year. The net annual public benefit
in the 1st year is estimated to be $2,600,000. Determine the B/C ratio for the investment using a
4% MARR.
B/C = 1.781
Carry all interim calculations to 5 decimal places and then round your final answer to 3 decimal
places. The tolerance is ±0.003.
Question 2
An investment of $1,001,000 today yields positive cash flows of $200,000 each year for years 1
through 10. MARR is 15%. Determine the DPBP of this investment.
10 years
Round your answer up to the nearest whole number of years. Tolerance is ±1.
Question 3
A new solid waste treatment plant is to be constructed in Washington County. The initial
installation will cost $35 million (M). After 10 years, minor repair and renovation (R&R) will occur
at a cost of $10M will be required; after 20 years, a major R&R costing $24M will be required.
The investment pattern will repeat every 20 years. Each year during the 20-year period,
operating and maintenance (O&M) costs will occur. The first year, O&M costs will total $1M.
Thereafter, O&M costs will increase at a compound rate of 4% per year. Based on a 4% MARR,
what is the capitalized cost for the solid waste treatment plant?
$ 102,952,190
Carry all interim calculations to 5 decimal places and then round your final answer to a whole
number. The tolerance is ±25,000.
Question 4
Nadine Chelesvig has patented her invention. She is offering a potential manufacturer two
contracts for the exclusive right to manufacture and market her product. Plan A calls for an
immediate single lump sum payment to her of $220,000. Plan B calls for an annual payment of
$18,000 plus a royalty of $0.60 per unit sold. The remaining life of the patent is 10 years.
Nadine uses a MARR of 10%/year. What must be the uniform annual sales volume of the
product for Nadine to be indifferent between the contracts, based on an annual worth analysis?
29,673 units
Carry all interim calculations to 5 decimal places and then round your final answer to the
nearest unit. The tolerance is ±10.
Question 5
Value Lodges owns an economy motel chain and is considering building a new 200-unit motel.
The cost to build the motel is estimated at $8,000,000; Value Lodges estimates furnishings for
the motel will cost an additional $700,000 and will require replacement every 5 years. Annual
operating and maintenance costs for the motel are estimated to be $800,000. The average
rental rate for a unit is anticipated to be $40/day. Value Lodges expects the motel to have a life
of 15 years and a salvage value of $900,000 at the end of 15 years. This estimated salvage
value assumes that the furnishings are not new. Furnishings have no salvage value at the end
of each 5-year replacement interval. Assuming average daily occupancy percentages of 50%,
60%, 70%, and 80% for years 1 through 4, respectively, and 90% for the 5th through 15th years,
a MARR of 12%/year, 365 operating days/year, and ignoring the cost of land, should the motel
be built? Base your decision on an internal rate of return analysis.
Build motel? Yes
What is the internal rate of return used to reach your decision? 13.7%
Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal
place. The tolerance is ±0.2.
ME2
A method used in evaluating projects as an “after-the-fact” justification tool of the

reimbursements to the overheads.
Benefit Cost Ratio
A method that is especially useful in problems involving endowments and public projects with
indefinite lives.
Capitalized Worth
It reflects the capital cost of an asset.

Capital recovery
Numerically, it is the annual worth value of the initial investment at a stated rate of return which
considers the salvage value in its calculations.
capital recovery
The equivalent annual amount an asset must earn to recover the initial investment plus a stated
rate of return.
capital recovery
A method that takes into account the interest rate external to a project at which net cash flows
generated by a project over its life can be reinvested.
External Rate of Return
Is the interest rate which is earned on unrecovered investments in a project such that uncovered
investment at the end of the life of a project is zero.
Internal Rate of Return
Another name for the internal rate of return method which is the discounted cash flow,
profitability index, widely used rate of return for performing engineering economic analysis.
investor’s method
It is a reasonable rate of return established for the evaluation of an economic alternative.

Minimum Attractive Rate of Return
It is a level established by an organization that a capital project must provide a return that
exceeds it.
The lowest rate of return of investment that an organization will accept.

External rate of return amounts discounted to the present at minimum attractive rate of return
per compounding period.
Net cash outflows
A method used in evaluating projects which is a measure of liquidity rather than a measure of
profitability.
Payback Period
Amount of time before recovery of the initial capital investment is expected.

Payback Period
Another name for the internal rate of return method which is the discounted cash flow, investor’s
method widely used rate of return for performing engineering economic analysis.
Profitability Index
It is the rate on the unpaid balance of borrowed money, or rate earned on the unrecovered
balance of an investment such that the last cash flow brings the balance exactly to zero.
rate of return
The estimated interest rate produced by an investment.

rate of return
The numerical value of i in a rate of return equation can range from:

-100% to infinity
The internal rate of return on an investment refers to the interest rate earned on the:
unrecovered balance of the investment
For the net cash flows and cumulative cash flows shown, the value of x is:
Year 1 2 3 4 5
NCF, $ +13,000 -29,000 -25,000 x -8,000
Cumulativ +13,000 -16,000 -41,000 +9,000 +1,000

e NCF, $
50,000
For the net cash flows and cumulative cash flows shown, the value of x is:
Year 1 2 3 4 5
NCF, $ +10,000 -23,000 -15,000 x -4,500
Cumulative +10,000 -13,000 -28,000 +5,500 +1,000

NCF, $
33,500
If the extra benefits obtained by investing additional capital are better than those that could be
obtained from investment of the same capital elsewhere in the company at the MARR, the
investment should be made.
True
If money is borrowed specifically for a project, the interest rate on the borrowed capital is
appropriate to use as the rate.
True
Recommendations using the BCR method will result in identical recommendations to PWM,
FWM and AWM.
Trueme
The internal rate of return can never be equal to the external rate of return.
False
A conventional cash flow series is one wherein: total of cumulative cash flows is zero
False
A company purchases a new machine with an initial cost of $15,000 and a salvage value of
$1,800. Net revenues in year 1 are $8,000, $8,150 in year 2, and increase by $150 each year
the following 8 years. Use a MARR of 12%. Determine the present worth (in $).
33,819.45
the following 8 years. Use a MARR of 12%. What is the annual worth (in $)?
5,985.51
the following 8 years. Use a MARR of 12%. Determine the IRR of this machine (in %, round off
to 2 decimal places).
55.21
An asset was purchased for P100,000 and retired at the end of 15 years with a salvage value of
P4,000. The annual operating cost was P18,000. Determine the capitalized cost (in $) of the
asset based on an interest rate of 8%.
369,195.45
What is the capitalized cost (in $) of a project cost of a public works project that will cost
$25,000,000 now and will require $2,000,000 in maintenance annually? The effective annual
interest rate is 12%.
41,666,666.67
The initial cost of a proposed project is $40M, the capitalized perpetual annual cost is $12M, the
capitalized benefit is $49M, and the residual value is $0. Determine the difference of the benefits
and costs (in $) of the project.
-3,000,000
A road resurfacing project costs $200,000, lasts 5 years and saves $100,000 annually in
patching costs. MARR is 10%. Determine the BCR (round off to 3 decimal places) of the project.
1.895
patching costs. MARR is 12%. Determine the present worth (in $).
290,716.43
patching costs. MARR is 12%. Determine the future worth (in $).
512,341.68
patching costs. MARR is 12%. Determine the annual worth (in $).
80,647.57
patching costs. MARR is 12%. Determine the BCR (round off to 3 decimal places) of the project.
2.163
A contractor is saving money for a lucrative project. The initial cost is $175,000, annual outlays
for maintenance is $1,500 and $4,000 every 3 years. There will be an additional one-time cost
of $15,000 in 2 years for miscellaneous fixtures. At an interest rate of 8% per annum, how much
money must he save now (in $) for the project?
210,431.76
A contractor is saving money for a lucrative project. The initial cost is $155,000, annual outlays
for maintenance is $1,000 and $2,000 every 3 years. There will be an additional one-time cost
of $10,000 in 2 years for miscellaneous fixtures. At an interest rate of 10% per annum, how
much money must he save now (in $) for the project?
179,306.76
Survey indicates that remunerations of field engineers are P1.75M against P2.9M for field
engineers with Construction Occupational Safety and Health (COSH) and other accredited
trainings. If the cost of trainings is assumed to be P1.5M per year for 2 years and the forgone
earnings during those years are assumed to be P1.75M per year, what internal rate of return (in
%, round off to 2 decimal places) does training represent? Use a 10year study period at a
MARR of 5%.
7.47
Survey indicates that remunerations of field engineers are P1.5M against P2.5M for field
engineers with Construction Occupational Safety and Health (COSH) and other accredited
trainings. If the cost of trainings is assumed to be P1.25M per year for 2 years and the forgone
earnings during those years are assumed to be P1.5M per year, what internal rate of return (in
%, round off to 2 decimal places) does training represent? Use a 10year study period at a
MARR of 8%.
8.11
Statistics show that the annual earnings for persons with a bachelor’s diploma are $35,220
versus $57,925 for someone with a master’s degree. If the cost of attending graduate studies is
assumed to be $30,000 per year for 4 years and the forgone earnings during those years are
assumed to be $35,220 per year, what rate of return (in %, round off to 2 decimal places)does
earning a master’s degree represent? Use a 35-year study period.
6.85
Ten years ago, a construction company purchased equipment for $5,700. Scrap value after 10
years is $1,000. At present, the average annual revenue of the company is $1,040. How much
(in $) was the company able to recover based from its revenue at 12% per year return?
88.18
Ten years ago, Mr. XYZ purchased a tractor for $285,000. He anticipated a salvage value of
$50,000 after 10 years. During this time his average annual revenue totaled $52,000. If the
annual M&O cost was $10,000 the first year and increased by a constant $1000 per year, what
was the annual worth (in $) at 12% per year? Assume the $50,000 salvage was realized.
-9,175
Given the cash flow diagram below, determine the external rate of return (in %, round off to 2
decimal places). MARR=8%
9.97
ABC purchased for a project for $3.15 million. The net cash flow is estimated at $500,000 per
year, and a salvage value of $400,000 is anticipated regardless of when it is sold. Determine the
number of years (round off to 2 decimal places) the equipment must be used to obtain payback
at MARR of 0% per year.
5.5
ABC purchased for a project for $3.15 million. The net cash flow is estimated at $500,000 per
at MARR of 8% per year.
8.2
ABC purchased for a project for $3.2million. The net cash flow is estimated at $550,000 per
at MARR value of 5% per year.
6.19
ABC purchased for a project for $3.2million. The net cash flow is estimated at $550,000 per
at MARR value of 10% per year.
8.26
A proposed project is to be assessed given the cash flow diagram below. Determine the
external rate of return (in %, round off to 2 decimal places) with a MARR=12%.
6.22
A proposed project is to be assessed given the cash flow diagram below. Determine the
external rate of return (in %, round off to 2 decimal places) with a MARR=10%
10.01
Shown in the table are the cash flows for 4 water treatment systems that are to be compared at
a MARR of 13% per year. Determine the savings between the alternative to be selected and the
next one.
Life n, years 3 4 6 12
Capital Investment, $ 150,000 175,000 250,000 450,000
Salvage Value, $ 15,000 0 5,000 30,500
Revenue, $ 60,000 60,500 65,000 75,000
1,396.44
next one.
5,291.71
next one.
492.81
next one.
6,799.09
next one.
3,736.9
next one.
2,136.6
next one.
1,192.44
Analyze the alternatives given below using capitalized cost at an interest rate of 12% per
annum. What is the difference between the 2 alternatives?
Alternative A Alternative B
Initial Cost, $ 150,000 800,000
Operating Cost, $ 50,000 12,000
Market Value EOL, $ 8,000 1,000,000
Life, years 5 ∞
147,065.15
97,263.78
189,133.34
Analyze the alternatives given below using capitalized cost at an interest rate of 8% per annum.
What is the difference between the 2 alternatives?
127,560.21
245,606.84
37,407.58
35,856.99
For the cash flows shown in the diagram below, determine the internal rate of return (in %,
round-off to 5 decimal places) by using interpolation method with 5% increment at a MARR of
4%.
8.662928005
6%.
8.851360554
5%.
8.796571624
8%.
8.647470031
8%.
8.673989048
7%.
8.750747997
7%.
8.681370548
6%.
8.630371958
8%.
8.70105485
7%.
8.821561911
6%.
8.739729142
5%.
8.646865701
An initial capital of $25,000 was put up for a new project that will produce an annual income of
$8,500 for 5 years and then will have a salvage value of $1,000 at that time. Annual expenses
for its operation and maintenance amounts to $750. If money is worth 7% compounded
annually, determine the project's ERR (in %, round-off to 5 decimal places).
12.1819822
11.67723163
13.19019958
12.68628414
11.17196509
14.19709591
13.69378589
15.2030777
14.70017827
Given the table of values, solve for the Benefit Cost Ratio (round-off to 4 decimal places) at an
interest rate of i=12% per annum.
PW, $ AW, $ FW, $
First Cost 100,000 221,068
M & O Cost 50,670 10,408 98,742
Benefits 40,000 403,560
Disbenefits 22,819 5,000
1.0601
PW, $ AW, $ FW, $
First Cost 100,000 194,872
M & O Cost 50,670 10,408 98,742
Benefits 38,000 360,512
1.0806
PW, $ AW, $ FW, $
First Cost 100,000 259,370
M & O Cost 61,446 10,000 159,374
Benefits 40,000 637,496

1.3321
Determine the payback period (in years, round-off to 5 decimal places) at an interest rate of 9%
per year for an asset that initially cost $30,000, has a scrap value of $1,700 whenever it is sold,
and generates cash flow of $3,100 per year.
23.18020861
18.75965443
Determine the payback period (in years, round-off to 5 decimal places) at an interest rate of
10% per year for an asset that initially cost $30,000, has a scrap value of $1,700 whenever it is
sold, and generates cash flow of $3,100 per year.
35.44959709
16.14786404
CW3
A contractor bought a crane for erecting tall buildings. It was invoiced from Japan CIF (cost,
insurance, freight) Manila at P2,500,000. Brokerage, bank, customs’ duties, permits, etc. total
P1,200,000. At the end of 10years, he expects to sell it for P500,000. Determine the book value
at the beginning of year 5 using the Straight-Line Method.
Answer 2,420,000
at the beginning of year 5 using the Sinking Fund Method at 12%.
Answer 2,828,492.74
at the beginning of year 5 using the Matheson Formula Method.
Answer 1,661,455.39
at the beginning of year 5 using the Double Declining Balance Method.
Answer 1,515,520
at the beginning of year 5 using the Sum of the Years Digit Method.
Answer 1,721,818.81
LQ3
Question 1
A 3D printer exclusively for producing dental molar crowns, complete with all the contouring and
evaluation apparatus for matching the removed molar, is purchased for $45,000. It will be
depreciated over 8 years and have a salvage value of $6,000. Using a table and the formulas,
determine the depreciation and book value at the end of each year using straight-line
depreciation.
depreciated over 8 years and have a salvage value of $6,000. Using a table and the Excel®
SLN function, determine the depreciation and book value at the end of each year using
straight-line depreciation.
determine the depreciation and book value at the end of each year using declining balance
depreciation with a percentage that will ensure the book value equals the salvage value at the
end of the final year.
determine the depreciation and book value at the end of each year using declining balance
depreciation with a depreciation rate of 150% of the straight-line rate.
Is the printer tangible or intangible?

Tangible
Is the printer personal property or real property?

Personal property
Is it better to say we are depreciating or amortizing the printer over time?

Depreciating
Question 2
Solar power is to be installed to handle a large portion of a company's electrical load. Even
though the system will likely work for 20-25 years, there is concern about functional
obsolescence and the need to replace the system with more efficient components much sooner.
The cost will be $270,000 and the system is expected to have a useful life of 8 years with a
salvage value of $25,000 at that time. Develop a table showing the depreciation and book value
for each year using double declining balance switching to straight line depreciation at the
optimal time. Do NOT use the Excel® VDB worksheet function. Show how you determine the
optimal time to switch to straight line depreciation.
How do you determine the optimal time to switch to straight line depreciation?
The optimum time to switch is the first time the depreciation charge with straight-line
depreciation is greater than the one that results from using declining balance method.
Solar power is to be installed to handle a large portion of a company's electrical load. Even
though the system will likely work for 20-25 years, there is concern about functional
obsolescence and the need to replace the system with more efficient components much sooner.
The cost will be $270,000 and the system is expected to have a useful life of 8 years with a
salvage value of $25,000 at that time. Develop a table showing the depreciation and book value
for each year using the Excel® VDB worksheet function, switching to straight line depreciation.
Is the solar power system tangible or intangible?

Tangible
Is the solar power system personal property or real property?

Personal property
Is it better to say the solar power system is being depreciated or amortized over time?
Depreciated
Question 3
An asset is purchased for $700,000 today. It will have a $75,000 salvage value after 7 years of
use. Using the straight-line (SLN) method, calculate the depreciation charge for year 2 and the
book value at the end of year 2.
ME3
Term used for asset value after some depreciation has been charged
adjusted basis
Measure the reduction in value of intangible assets

Amortization
Remaining undepreciated capital investment in a year

BOOK VALUE
Worth of a property as shown in the accounting records of an enterprise

BOOK VALUE
Decrease in the value of a property due to the gradual extraction of its contents
DEPLETION
Measure of the rate of exhaustion of natural assets or resources

Depletion
Is the measure of value loss of fixed assets

DEPRECIATION
The decrease in the value of a physical property with the passage of time
DEPRECIATION
The process of decline in the property value over time

DEPRECIATION
Is the fraction of the first cost removed by depreciation each year

Depreciation rate
Length of time during which the property may be operated at a profit

ECONOMIC LIFE
The essence of this method is the depreciation by the chosen rate, depending on the type of
property
Fixed percentage
Lessening of the demand for the use of a property for which it was designed
FUNCTIONAL DEPRECIATION
Amount a willing buyer will pay to a willing seller for the property
MARKET VALUE
Amount realizable if asset were sold on open market

MARKET VALUE
Another term used for DECLINING BALANCE

MATHESON FORMULA
Assumes that the annual loss in value is a fixed percentage of the salvage value at the
beginning of the year
DECLINING BALANCE
Depreciation is charged at fixed rate on the reducing balance

DECLINING BALANCE
Means a reduction of usefulness of assets due to technological changes or change in market

demand
Obsolescence
Refers to reduction of usefulness of assets due to technological changes

Obsolescence
Possessions of company used to conduct business

PERSONAL PROPERTY
Depreciation due to the lessening of the physical ability of a property to produce results
PHYSICAL
Length of time during which the property is capable of performing the function it was designed
and manufactured
PHYSICAL LIFE
Is the depreciable life of the asset in years

Recovery period
Is the estimated trade-in value at the end of an asset’s useful life
Salvage value
Price that can be obtained from the sale of a property after it has been used
Salvage value
The amount a property would sell for if disposed off as junk

SCRAP VALUE
At the estimated expiry useful life of the asset, the amount of depreciation each year is invested
in easily realizable securities which can be readily available for the replacement of the asset
Sinking Fund
Assumes that funds will accumulate for replacement of the property

SINKING FUND
Assumes that the loss in value is directly proportional to the age of the property
STRAIGHT LINE
Is a constant charge method in solving for depreciation

STRAIGHT LINE
Method applied for measuring allocation of fall in value of assets with constant annual charge
Straight Line
Is assumed that an asset value decreases continuously over the years by a constantly
decreasing value which is associated with the number of years of an asset use only in the
reverse order
Sum of Years Digits
Under this method the amount of depreciation to be charged to the Profit and Loss Account
goes on decreasing every year throughout the life of the asset
Sum of Years Digits
Refers to the first cost plus any other depreciable costs that make the asset ready for operation
UNADJUSTED BASIS
Total first cost of asset

UNADJUSTED BASIS
A construction company decided to purchase a concrete mixer truck for $85,000 with a trade-in
of their old mixer. The old mixer has a trade-in value of $10,000. The new mixer will be kept for
10 years before being sold. Its estimated salvage value at that time is expected to be $5,000.
Assume interest to be 12%. Determine the 7th year BVB by Sinking Fund Method.
53,380.65
Assume interest to be 12%. Determine the 7th year total depreciation by Sinking Fund Method.
51,742.25
70,488.86
32,581.05
43,257.75
63,079.9
A property that is book-depreciated over a 5-year period by the SLM has $62,000 book value on
the 3rd year with a depreciation charge of $26,000 per year. Determine the first cost of the
property.
140,000
A property that is book-depreciated over a 5-year period by the SLM has $62,000 book value on
the 3rd year with a depreciation charge of $26,000 per year. Determine the assumed salvage
value of the property.
10,000
An engineer bought an equipment at P2,500,000. Delivery, installation, permits, etc. total

P1,200,000. After 10years, it will sell for P500,000. By DBM, (approximate k to 2 decimal
places) determine the total depreciation charge on its 5th year.
2,328,262.58
SLM: A construction company decided to purchase a concrete mixer truck for $75,000 with a
trade-in of their old mixer. The old mixer has a trade-in value of $20,000. The new mixer will be
kept for 10 years before being sold. Its estimated salvage value at that time is expected to be
$5,000. Assume interest to be 10%. Determine the 5th year BVB by Straight Line Method.
59,000
50,000
41,000
32,000
SFM: A construction company decided to purchase a concrete mixer truck for $75,000 with a
$5,000. Assume interest to be 12%. Determine the 5th year BVB by Sinking Fund Method.
70,488.86
62,418.95
53,380.65
43,257.75
DBM: A construction company decided to purchase a concrete mixer truck for $75,000 with a
$5,000. Assume interest to be 10%. Determine the 5th year BVB by Declining Balance Method
(round-off k to 4 decimal places).
29,256.49
21,794.49
16,235.72
12,094.73
DDBM: A construction company decided to purchase a concrete mixer truck for $75,000 with a
$5,000. Assume interest to be 10%. Determine the 5th year BVB by Double Declining Balance
Method (round-off k to 4 decimal places).
38,912
31,129.6
19,922.94
19,922.94
SYDM: A construction company decided to purchase a concrete mixer truck for $75,000 with a
$5,000. Assume interest to be 10%. Determine the 5th year BVB by Sum of Years Digit Method.
39,363.64
29,545.45
21,363.64
14,818.18
61,466.67
56,333.33
51,200
46,066.67
40,933.33
35,800
30,666.67
25,533.33
20,400
72,128.46
68,878.41
65,238.35
56,595.4
56,595.4
51,481.38
45,753.68
39,338.65
32,153.82
38,891.57
32,274.97
26,784.05
22,227.3
18,445.78
15,307.62
10,542.13
8,748.6
12,703.34
46,261.77
40,093.53
34,747.73
30,114.7
26,099.4
22,619.48
19,603.55
16,989.75
14,724.45
47,350
33,875
40,291.67
28,100
22,966.67
$5,000. Assume interest to be 12%. Determine the 10th year BVB by Sum of Years Digit
Method.
18,475
Method.
14,625
Method.
11,416.67
Method.
8,850
SLM: A property that is book-depreciated over a 10-year period by the Straight Line Method has
$52,400 book value on the 3rd year with a depreciation charge of $7,200 per year. Determine
the first cost of the property.
74,000
$45,200 book value on the 4th year with a depreciation charge of $7,200 per year. Determine
74,000
74,000
74,000
74,000
74,000
$52,400 book value on the 3rd year with a depreciation charge of $7,200 per year. Determine
the assumed salvage value of the property.
2,000
2,000
2,000
2,000
2,000
2,000
SFM: A property that is book-depreciated over a 10-year period by the Sinking Fund Method
has $60,636.03 book value on the 3rd year with a depreciation charge of $3,960.40 per year.
Determine the first cost of the property at i=12%.
74,000
has $55,071.95 book value on the 4th year with a depreciation charge of $3,960.40 per year.
74,000
74,000.01
74,000
74,000
74,000
has $60,636.03 book value on the 3rd year with a depreciation charge of $3,960.40 per year.
Determine the assumed salvage value of the property at i=12%.
4,499.99
4,499.99
4,500
4,499.99
4,499.99
4,499.99
DBM: A property that is book-depreciated over a 10-year period by the Declining Balance
Method has $27,208.81 book value on the 3rd year. Determine the first cost of the property
69,999.99
Method has $19,856.99 book value on the 4th year. Determine the first cost of the property
69,999.99
69,999.98
69,999.97
70,000
70,000.01
Method has $27,208.81 book value on the 3rd year. Determine the assumed salvage value of
the property (round-off k to 4 decimal places).
3,000.11
Method has $19,856.99 book value on the 4th year. Determine the assumed salvage value of
3,000.11
3,000.11
3,000.11
Method has $7,718.36 book value on the 7th year. Determine the assumed salvage value of the
property (round-off k to 4 decimal places).
3,000.11
Method has $5,632.86 book value on the 8th year. Determine the assumed salvage value of the
3,000.11
DDBM: A property that is book-depreciated over a 10-year period by the Double Declining
Balance Method has $35,840 book value on the 3rd year. Determine the first cost of the
70,000
Balance Method has $28,672 book value on the 4th year. Determine the first cost of the
70,000
Balance Method has $22,937.60 book value on the 5th year. Determine the first cost of the
70,000
70,000
69,999.98
Balance Method has $35,840 book value on the 3rd year. Determine the assumed salvage
value of the property (round-off k to 4 decimal places).
7,516.19
Balance Method has $35,840 book value on the 3rd year. Determine the assumed salvage
7,516.19
Balance Method has $28,672 book value on the 4th year. Determine the assumed salvage
7,516.19
Balance Method has $22,937.60 book value on the 5th year. Determine the assumed salvage
7,516.19
7,516.19
7,516.19
7,516.19
SYDM: A property that is book-depreciated over a 10-year period by the Sum of Years Digit
Method has $9,745.45 depreciation charge and $37,109.09 book value on the 3rd year.
Determine the first cost of the property.
69,999.98
Method has $8,527.27 depreciation charge and $28,581.82 book value on the 4th year.
70,000
70,000
70,000.01
70,000.03
70,000.08
Determine the assumed salvage value of the property.
3,000
3,000
3,000
3,000.01
3,000
Method has $9,745.45 depreciation charge and $37,109.09 book value on the 3rd year.
3,000.02

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CW2

Determine the Capital Recovery (CR) value of the jet.

Determine the Annual Worth (AW) of the jet.

Determine the Equivalent Uniform Annual Cost (EUAC) of the jet.

Build motel? Yes

A method used in evaluating projects as an “after-the-fact” justification tool of the

It reflects the capital cost of an asset.

It is a reasonable rate of return established for the evaluation of an economic alternative.

The lowest rate of return of investment that an organization will accept.

Amount of time before recovery of the initial capital investment is expected.

The estimated interest rate produced by an investment.

The numerical value of i in a rate of return equation can range from:

NCF, $ +13,000 -29,000 -25,000 x -8,000

Cumulativ +13,000 -16,000 -41,000 +9,000 +1,000

NCF, $ +10,000 -23,000 -15,000 x -4,500

Cumulative +10,000 -13,000 -28,000 +5,500 +1,000

Capital Investment, $ 150,000 175,000 250,000 450,000

Salvage Value, $ 15,000 0 5,000 30,500

Revenue, $ 60,000 60,500 65,000 75,000

Initial Cost, $ 150,000 800,000

Operating Cost, $ 50,000 12,000

Market Value EOL, $ 8,000 1,000,000

First Cost 100,000 221,068

M & O Cost 50,670 10,408 98,742

Benefits 40,000 403,560

Disbenefits 22,819 5,000

First Cost 100,000 194,872

M & O Cost 50,670 10,408 98,742

Benefits 38,000 360,512

Disbenefits 22,180 4,556

First Cost 100,000 259,370

M & O Cost 61,446 10,000 159,374

Benefits 40,000 637,496

Disbenefits 30,723 5,000

Is the printer tangible or intangible?

Is the printer personal property or real property?

Is it better to say we are depreciating or amortizing the printer over time?

Is the solar power system tangible or intangible?

Is the solar power system personal property or real property?

Measure the reduction in value of intangible assets

Remaining undepreciated capital investment in a year

Worth of a property as shown in the accounting records of an enterprise

Measure of the rate of exhaustion of natural assets or resources

Is the measure of value loss of fixed assets

The process of decline in the property value over time

Is the fraction of the first cost removed by depreciation each year

Length of time during which the property may be operated at a profit

Amount realizable if asset were sold on open market

Another term used for DECLINING BALANCE

Depreciation is charged at fixed rate on the reducing balance

Means a reduction of usefulness of assets due to technological changes or change in market

Refers to reduction of usefulness of assets due to technological changes

Possessions of company used to conduct business

Is the depreciable life of the asset in years

The amount a property would sell for if disposed off as junk

Assumes that funds will accumulate for replacement of the property

Is a constant charge method in solving for depreciation

Total first cost of asset

An engineer bought an equipment at P2,500,000. Delivery, installation, permits, etc. total

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