An energy production company has the following information regarding the acquisition of new gas- turbine equipment. Purchase price = S780,000 Trans-oceanic shipping and delivery cost =$4300 Installation cost (1 technician at $1600 per day for 4 days) = $6400 Tax recovery period = 15 years Book depreciation recovery period = 10 years Salvage value = 10% of purchase price Operating cost (with technician) = $185,000 per year The manager of the department asked your friend in Accounting to enter the appropriate data into the tax-accounting program. What are the values of B, n, and S in depreciating the asset for tax purposes that he should enter?

An energy production company has the following information regarding the acquisition of new gas- turbine equipment. Purchase price = S780,000 Trans-oceanic shipping and delivery cost =$4300 Installation cost (1 technician at $1600 per day for 4 days) = $6400 Tax recovery period = 15 years Book depreciation recovery period = 10 years Salvage value = 10% of purchase price Operating cost (with technician) = $185,000 per year The manager of the department asked your friend in Accounting to enter the appropriate data into the tax-accounting program. What are the values of B, n, and S in depreciating the asset for tax purposes that he should enter?

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

An energy production company has the following
information regarding the acquisition of new gas-
turbine equipment.
Purchase price = S780,000
Trans-oceanic shipping and delivery cost =$4300
Installation cost (1 technician at $1600 per day
for 4 days) = $6400
Tax recovery period = 15 years
Book depreciation recovery period = 10 years
Salvage value = 10% of purchase price
Operating cost (with technician) = $185,000
per year
The manager of the department asked your friend
in Accounting to enter the appropriate data into the
tax-accounting program. What are the values of B,
n, and S in depreciating the asset for tax purposes
that he should enter?

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