Question 6 (1 point)
1 answer:
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Answer: depreciation = $4020
book value = $77,360
Explanation: Under straight line method of depreciation, the value of the fixed asset is distributed over its useful life equally . It is calculated as follows :-
putting the values into equation we get :-
$4020
.
Book value = Initial value - (years * depreciation)
= $85,400 - (2 * $4020)
= $77,360
Answer:
Present value of the offer = $739,018.03
Explanation:
The cash flows described in the question from end of year 1 to end of year 20 represent a growing annuity for 20 years. The present value of a growing annuity is calculated as follows:
PV=
where P = the annuity payment in the first period
i = interest rate per period that would be compounded for each period
g = growth rate
n = number of payment periods
P in the 1st year = the base salary of $59,000 + the 10% bonus of $5,900 = $64,900; g is 3.9% ;i=0.1 and n = 20
Present value of the offer = 15,000 received immediately + PV of the growing annuity
= =739,018.03