Discuss how firms can benefit from (1) related diversification and also can benefit from (2) unrelated diversification. Discuss
1 answer:
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Answer: <u><em>Depreciation for the first year = 17825</em></u>
Explanation:
Given:
Machine purchased for $125,000
Salvage value of $10,000
Output = 100,000
First year of operation, Output = 15500
First, we'll evaluate depreciation per unit over the entire life of the machine:
i.e.
Depreciation per unit =
<em>Depreciation per unit = 1.15</em>
Now, we'll compute the depreciation for the first year:
Depreciation for the first year = Depreciation per unit × Output (first year)
Depreciation for the first year = 1.15 × 15500
<u><em>Depreciation for the first year = 17825</em></u>