165.6 Historical and Exponential Depreciation1. Sandi's new car cost her $24,000. He was told that this make and model depreciates exponentially at arate of 9.5% per year. How much will her car be worth after 63 months?

Depreciation is the allocation of asset cost over its useful life on logical basis.

Answered: 5.6 Historical and Exponential…

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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2. Suppose that Carolyn knows that her car straight line depreciates at a rate of $3,500 per year over a 10-year period. What was the original price of her car?
2. Brown Company bought a new machine 1 year ago for 12 million dollars. At that time the machine was estimated to have a life of 6 years and no salvage value. Annual operating costs are estimated at 20 million dollars. A new machine produced by another company does the same job but with an annual operating cost of only 17 million dollars. This new machine costs $21 million with a 5 year lifespan and no salvage value. The old machine can be sold for 10 million dollars. Straight-line depreciation is used and 40 percent corporate tax. If the cost of capital is 8 percent after taxes, calculate:a). Initial investment costsb). After-tax incremental cash flow.c). NPV of new investment.
4
i.3
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Josh bought a huge photocopier machine for 350,000.00 pesos for his new business and will use it for 9 years with a salvage value 85,000.00 pesos. a. How much is the book value on the 4th year if he used sum of the years digit method in computing the depreciation?b. How much is the total depreciation after using the machine for 3 years?
Question 7 Xavier purchased a new car for $40,000. It depreciates at 6% p.a using flat rate depreciation. a. i) Calculate the annual depreciation of the car. ii) Write a recurrence relation to model the depreciation value of the car. iii) Use recurrence relation from part ii) to show that the value of the car at V4 is $30,400.
4. A new car sells for $29,700. It exponentially depreciates at a rate of 6.35% to $24,300. How long did it take for the car to depreciate to this amount? Round your answer to the nearest tenth of a year.
Chapter 10, Question 6
3
29. X Corporation is considering buying a $25,000 machine. Its estimated useful life is 5 years, with no salvage value. X anticipates annual net income after taxes of $1,500 from the new machine. What is the rate of return on average investment, assuming that X uses straight-line depreciation and that the net income is earned uniformly throughout each year? A. 6.0% B. 8.0% C. 12.0% D. 26.0% E. 52.0%
None

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5.6 Historical and Exponential Depreciation 1. Sandi's new car cost her $24,000. He was told that this make and model depreciates exponentially at a rate of 9.5% per year. How much will her car be worth after 63 months?