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of equipm S = 120,00 ies is estin ve AW

of equipm S = 120,00 ies is estin ve AW

FINANCIAL ACCOUNTING
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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A piece of equipment has a first cost of $165,000, a maximum useful life of 7 years, and a market (salvage) value described by the relation S= 120,000 – 23,000OK, where k is the number of years since it was purchased. The salvage value cannot go below zero. The AOC series is estimated using AOC = 60,000 + 12,000k. The interest rate is 13% per year. Determine the economic service life and the respective AW. The economic service life is 4 O year(s) and the AW value is $ 100,000 O
Transcribed Image Text:A piece of equipment has a first cost of $165,000, a maximum useful life of 7 years, and a market (salvage) value described by the relation S= 120,000 – 23,000OK, where k is the number of years since it was purchased. The salvage value cannot go below zero. The AOC series is estimated using AOC = 60,000 + 12,000k. The interest rate is 13% per year. Determine the economic service life and the respective AW. The economic service life is 4 O year(s) and the AW value is $ 100,000 O
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