Answer and explanation:
In both cases, in terms of rent and terms of students benefits, it will be better for the college to have two stores, In that way, the college makes sure the profits will be higher than just by having one store on campus and students are benefited because of the variety of books they could find in the two stores, not just in one.
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Straight line method formula is depreciable amount /
estimated useful life.
Plugging in our data from the problem above:
[(30,000,000 + 2,000,000)
- 2,400,000
= ----------------------------------------------------
40
years
32,000 000 – 2,400,000
= ----------------------------------
40 years
29,600,000
= ---------------
40 years
= 740,000 is the depreciation for the first full year.