2. A diesel generator for a manufacturing firm cost P100,000. Installation cost is worth P5,000. Other expenses amount to P3,000. The salvage value of the generator is P15,000 after 20 years. Find the annual depreciation and book value at the end of 10 years using straight line method.

2. A diesel generator for a manufacturing firm cost P100,000. Installation cost is worth P5,000. Other expenses amount to P3,000. The salvage value of the generator is P15,000 after 20 years. Find the annual depreciation and book value at the end of 10 years using straight line method.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

SUBJECT: ENGINEERING ECONOMICS
LESSON: STRAIGHT LINE METHOD

PLEASE USE THE FORMULA ON THE SECOND PICTURE AND ANALYZE THE QUESTION WELL. PLEASE MAKE SURE TO ANSWER IT BY STEP BY STEP METHOD

2. A diesel generator for a manufacturing
firm cost P100,000. Installation cost is
worth P5,000. Other expenses amount to
P3,000. The salvage value of the generator
is P15,000 after 20 years. Find the annual
depreciation and book value at the end of
10 years using straight line method.

A. STRAIGHT LINE METHOD
Co-C₂✓1
L
n(Co-C₂) and
D₁ =
L
Cn = Co-D₂.
Where: d = annual cost of depreciation
De depreciation up to age n years
Co-original cost/FC
C-value at the end of life, scrap value/SV
C-book value at the end of n years /8V
L= useful life of a property in years

Application of economic techniques to the evaluation of design and engineering alternatives. The role of engineering economics is to assess the appropriateness of a given project, estimate its value, and justify it from an engineering standpoint.

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