George buys a car on April 3 for $25,000. George estimates it has a life expectancy of 10 years with a residual value of $5,000. Using straight line depreciation, what will be the depreciation after the First year? O $5,000 O$2,000 O $2,500 O $1,500 QUESTION 3 A pair of twins were given $20,000 on their birthday in 2020. One twin purchased a car for $20,000 with a expected life of 7 years and residual value of $3,000. The other twin bought one Bitcoin. Assume straight line depreciation. If Bitcoin is now worth $60,000, how much is the difference between the book value of twin 1's car and the twin 2's bitcoin? Hint: $60,000-book value. Assume this is the end of year two for the car. O $57,571 O$44,857 O $24,857 O $17,571 QUESTION 4 Using the MACRS three-year table, how much will a $1,000 cell phone be worth after 2 years (the book value not the depreciation for year 2)?

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
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QUESTION 2
George buys a car on April 3 for $25,000. George estimates it has a life expectancy of 10 years with a residual value of $5,000. Using straight line depreciation, what will be the depreciation after the
first year?
O $5,000
O $2,000
O $2,500
$1,500
QUESTION 3
A pair of twins were given $20,000 on their birthday in 2020. One twin purchased a car for $20,000 with a expected life of 7 years and residual value of $3,000. The other twin bought one Bitcoin.
Assume straight line depreciation. If Bitcoin is now worth $60,000, how much is the difference between the book value of twin 1's car and the twin 2's bitcoin? Hint: $60,000-book value. Assume this is
the end of year two for the car.
O $57,571
O $44,857
$24,857
$17,571
QUESTION 4
Using the MACRS three-year table, how much will a $1,000 cell phone be worth after 2 years (the book value not the depreciation for year 2)?
QUESTION 5
Based on your answer in question 4, if the cell phone store offered $100 for trade in, should you accept (True) or reject (False) the offer?
True
False
Click Save and Submit to save and submit. Click Save All Answers to save all answers.
O
O
Transcribed Image Text:Question Completion Status: QUESTION 2 George buys a car on April 3 for $25,000. George estimates it has a life expectancy of 10 years with a residual value of $5,000. Using straight line depreciation, what will be the depreciation after the first year? O $5,000 O $2,000 O $2,500 $1,500 QUESTION 3 A pair of twins were given $20,000 on their birthday in 2020. One twin purchased a car for $20,000 with a expected life of 7 years and residual value of $3,000. The other twin bought one Bitcoin. Assume straight line depreciation. If Bitcoin is now worth $60,000, how much is the difference between the book value of twin 1's car and the twin 2's bitcoin? Hint: $60,000-book value. Assume this is the end of year two for the car. O $57,571 O $44,857 $24,857 $17,571 QUESTION 4 Using the MACRS three-year table, how much will a $1,000 cell phone be worth after 2 years (the book value not the depreciation for year 2)? QUESTION 5 Based on your answer in question 4, if the cell phone store offered $100 for trade in, should you accept (True) or reject (False) the offer? True False Click Save and Submit to save and submit. Click Save All Answers to save all answers. O O
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