11-31. Please solve the PW of the depreciation schedule based on 15% interest ra

Question

11-31. Please solve the PW of the depreciation schedule based on 15% interest rate. I know how to find A, B, C, D. Please show formula and steps on finding the PW of A, B, C, and D. The answers are $9536, $11,058, $13803, $12,091 respectively. I just need to know how to get those answers. Thank you.

Please no excel.

ation . If 10% is appropriate, which depreciation method e nters selected? ould be 1-31 A small used delivery van can be purc ed f $20,000. At the end of its useful life (8 the van can be sold for $3000. Determine the of the depreciation schedule based on 15% using: (a) Straight-line depreciation (b) Sum-of-years'-digits depreciation (c) MACRS depreciation (d) Double declining balance depreciation $20,000. At the end of its usef hd 0r nterest 1-32 Loretta Livermore Labs purchased R&D; costing $200,000. The interest rate is 5 upment

Explanation / Answer

A. Annual depreciation on straight line basis = (20000-3000)/8 = 2125

Discount factor = 1/1.15^n

Schedule is

PW of depreciation = Sum of discounted cash flows

B.  

PW of depreciation = Sum of discounted cash flows

C. As per MACRS 5 year schedule

The workings are as follows

D:

A Straight line Year Depreciation Discount factor Discounted depreciation 1 2125 0.86956522 1847.826087 2 2125 0.75614367 1606.805293 3 2125 0.65751623 1397.221994 4 2125 0.57175325 1214.975647 5 2125 0.49717674 1056.500563 6 2125 0.4323276 918.6961413 7 2125 0.37593704 798.8662098 8 2125 0.32690177 694.6662694 NPV 9535.558204

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.