Answered: salvage value at the time is expected…

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

The La Salle Bus company has decided to purchase a new bus for $85,000 with a trade-in of their old bus. The old bus has a book value of $10,000 at the time of the trade-in. The new bus will be kept for ten years before being sold. Its estimated salvage value at the time is expected to be $5,000.

Book Value = $ 85,000(New Bus) + 10,000 (Old Bus)

Bus Asset Class = 9 years

Solve for the depreciation using the 3 classical methods, USE a 200% for DBM.

3 CLASSICAL METHODS:

1.) Straight Line

2.) Declining Balance

3.) Sum of the Years Digits

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