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

Name: A contractor purchased a Caterpillar D-13 dozerfor $100,000 and owned
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Description: A contractor purchased a Caterpillar D-13 dozerfor $100,000 and owned it for five years. Theannual cost for maintenance and repair isprovided in the Table. With an annual interestrate at 7% and end-of-year disbursements, theuniform annual cost for m

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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

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