1 $6300 $1100 8100 2100 3 10200 2500 4 11700 3100 15600 2600 The asset will be depreciated using the straight-line method with no expected salvage value. The cash payback period is 2.46 years. 2.45 years. 2.36 years. 3.02 years.
1 $6300 $1100 8100 2100 3 10200 2500 4 11700 3100 15600 2600 The asset will be depreciated using the straight-line method with no expected salvage value. The cash payback period is 2.46 years. 2.45 years. 2.36 years. 3.02 years.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Question
Transcribed Image Text:Accounting
Sheridan is contemplating a capital investment of $19100. The cash flows over
the project's five year life are projected as follows:
Expected Annual
Cash Inflows
Expected Annual
Cash Outflows
Year
1
$6300
$1100
2
8100
2100
3
10200
2500
4
11700
3100
15600
2600
The asset will be depreciated using the straight-line method with no expected
salvage value. The cash payback period is
2.46 years.
2.45 years.
2.36 years.
3.02 years.
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