A contractor purchased a Caterpillar D-13 dozer for $100,000 and owned it for five years. The annual cost for maintenance and repair is provided in the Table. With an annual interest rate at 7% and end-of-year disbursements, the uniform annual cost for maintenance and repair for the dozer is most nearly: Maintenance and repair cost Year 1 2 3 4 5 $4,500 $9,000 $11,800 $13,500 $22,500
A contractor purchased a Caterpillar D-13 dozer for $100,000 and owned it for five years. The annual cost for maintenance and repair is provided in the Table. With an annual interest rate at 7% and end-of-year disbursements, the uniform annual cost for maintenance and repair for the dozer is most nearly: Maintenance and repair cost Year 1 2 3 4 5 $4,500 $9,000 $11,800 $13,500 $22,500
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 10PB: For each of the following unrelated situations, calculate the annual amortization expense and...
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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
![A contractor purchased a Caterpillar D-13 dozer
for $100,000 and owned it for five years. The
annual cost for maintenance and repair is
provided in the Table. With an annual interest
rate at 7% and end-of-year disbursements, the
uniform annual cost for maintenance and repair
for the dozer is most nearly:
Maintenance and repair cost
Year
1
2
3
4
5
O $9,700
O $11,700
O None
O $10,700
$4,500
$9,000
$11,800
$13,500
$22,500](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5a47c208-9ef3-438e-b289-156976afd20e%2F46d36f25-6360-4ed4-ac50-d1e82cb2e436%2Fz3uqwdf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A contractor purchased a Caterpillar D-13 dozer
for $100,000 and owned it for five years. The
annual cost for maintenance and repair is
provided in the Table. With an annual interest
rate at 7% and end-of-year disbursements, the
uniform annual cost for maintenance and repair
for the dozer is most nearly:
Maintenance and repair cost
Year
1
2
3
4
5
O $9,700
O $11,700
O None
O $10,700
$4,500
$9,000
$11,800
$13,500
$22,500
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