Depreciation, in problems below, is under the sinking fund method. 1. An automobile costs $3500 when new, and its salvage value at the end of 6 years is $400. (a) If the depreciation fund earns 4%, by how much is the book value decreased during the 4th year? (b) By how much is the book value decreased during the 4th year, under the straight line method?
Depreciation, in problems below, is under the sinking fund method. 1. An automobile costs $3500 when new, and its salvage value at the end of 6 years is $400. (a) If the depreciation fund earns 4%, by how much is the book value decreased during the 4th year? (b) By how much is the book value decreased during the 4th year, under the straight line method?
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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Transcribed Image Text:Depreciation, in problems below, is under the sinking fund method.
1. An automobile costs $3500 when new, and its salvage value at the
end of 6 years is $400. (a) If the depreciation fund earns 4%, by how
much is the book value decreased during the 4th year? (b) By how
much is the book value decreased during the 4th year, under the straight
line method?
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