Engineering Economy
Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
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Chapter 7, Problem 10P
To determine

Calculate the recovery period and depreciation.

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A piece of equipment having a negligible salvage and scrap value is estimated to have a MACRS and straight line recovery period of 5 years. The original cost of the equipment was $50,000. Determine (1) the depreciation charge for the second year if straight-line deprecia- tion is used and the percent of the original investment paid off in the first 2 years, and (2) the depreciation charge for the fifth year if the modified acceleration cost recovery system (MACRS) is used, and the percent of the original investment paid off in the first 2 years.
Office furniture for a large engineering facility is placed in service at a total cost of $2,100,000 plus installation of $500,000. It is expected to last 15 years with a salvage value of $250,000. What is the MACRS-GDS property class? Generate a depreciation schedule for each year of depreciation (calculate depreciation allowance and book value for each year).
Your company has purchased a large new trucktractor for​ over-the-road use​ (asset class​ 00.26). It has a cost basis of $176,000. With additional options costing $14,000​, the cost basis for depreciation purposes is $190,000. Its MV at the end of six years is estimated as $41,000. Assume it will be depreciated under the​ GDS: a. What is the cumulative depreciation through the end of year two​? b. What is the MACRS depreciation in the fourth ​year? c. What is the BV at the end of year two​?

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Engineering Economy

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