Wild Flowers Express has a debt-equity ratio of .60. The pretax cost of debt is 9 percent while the unlevered cost of capital is
1 answer:
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Answer:
$84,000
Explanation:
Cost = $200,000
Residual value = $40,000
Expected hours = 20,000
Working hours (year 1) = 2,500 hours
Working hours (year 2) = 3,000 hours
Working hours (year 3) = 4,000 hours
Working hours (year 4) = 5,000 hours
Now,
Depreciation per hour =
Depreciation per hour =
Depreciation per hour =
Depreciation per hour = $8
Depreciation exper for each year can be calculated using the units-of-production method. Under this method, depreciation expense per hours is multiplied with the hours used during each year.
Depreciation schedule for the machine has been constructed and attached below:
