A firm is considering purchasing two assets. Asset A will have a useful life of

Question

A firm is considering purchasing two assets. Asset A will have a useful life of 10 years and cost $3 million; it will have installation costs of $400,000 but no salvage or residual value. Asset B will have a useful life of 4 years and cost $1.3 million; it will have installation costs of $180,000 and also have no residual value. Which asset will have a greater annual straight-line depreciation? Answer                                                   
           Asset A has $40,000 more in depreciation per year.                             
           Asset B has $30,000 more in depreciation per year.                             
           Asset A has $30,000 more in depreciation per year.                             
           Asset B has $40,000 more in depreciation per year. A firm is considering purchasing two assets. Asset A will have a useful life of 10 years and cost $3 million; it will have installation costs of $400,000 but no salvage or residual value. Asset B will have a useful life of 4 years and cost $1.3 million; it will have installation costs of $180,000 and also have no residual value. Which asset will have a greater annual straight-line depreciation? A firm is considering purchasing two assets. Asset A will have a useful life of 10 years and cost $3 million; it will have installation costs of $400,000 but no salvage or residual value. Asset B will have a useful life of 4 years and cost $1.3 million; it will have installation costs of $180,000 and also have no residual value. Which asset will have a greater annual straight-line depreciation? Asset A has $40,000 more in depreciation per year. Asset B has $30,000 more in depreciation per year. Asset A has $30,000 more in depreciation per year. Asset B has $40,000 more in depreciation per year.                             
           Asset A has $40,000 more in depreciation per year.                             
           Asset B has $30,000 more in depreciation per year.                             
           Asset A has $30,000 more in depreciation per year.                             
           Asset B has $40,000 more in depreciation per year.

Explanation / Answer

depriciation of A = 3400000/10 = 340000

depriciation of B = 14800000/4 = 370000

Asset B has $30,000 more in depreciation per year

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