Consider a $1200 investment for a new plant that is expected to have a Residual Value of $200 in five years. What is the Salvage
1 answer:
Answer:
$173
Explanation:
The computation of the salvage value at the end of year 5 is given below:
Cost of the asset $1,200
Multiply with the depreciation rate 5.76%
Book value at the 5 year end = $69
Resale value $200
gain on sales $131
Multiply with the Capital gain 21%
tax on gain $27
After tax gain on salvage value $173 ($200 - $27)
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Answer:
the value of the payments today is 14,047
Explanation:
this problem can be solved applying the concept of annuity, keep in mind that an annuity is a formula which allows you to calculate the present value of future payments affected by an interest rate. by definition the present value of an annuity is given by:
where is the present value of the annuity,
is the interest rate for every period payment, n is the number of payments, and P is the regular amount paid. so applying to this particular problem, we have:
Answer:
(D) Annual depreciation will be $11000
And book value will be $38000
Explanation:
We have given Kansas purchased equipment for $60000
So Acquisition cost = $60000
Residual value = $5000
We know that annual depreciation is given by
Life time = 5 years
Annual depreciation expense
Depreciation expense is the same every year under straight-line. Therefore, in 2013 the depreciation expense is $11,000
Book value is given by
Book value = Acquisition Cost - Accumulated Depreciation
=
The Book Value of the asset is therefore $38,000 after 2 years of service