- Economic service life calculations for an asset are shown below. If an interest rate of 10% per year was used in making the calculations, determine the values of P and S that were used in calculating the AW for year 3.
- Lee Company of Westbrook, Connecticut, produces pressure relief inserts for applications of thermal relief and low-flow hydraulic pressure relief where zero leakage is needed. By the straight-line approach using a 5-year useful life, a machine purchased 3 years ago was book-depreciated. If the book value is $30,000 at the end of year 3 and the business believed that the machine will be useless at the end of its useful 5-year existence, (a) what is each year’s book depreciation charge and (b) what was the machine’s first cost?
- Using (a) straight-line depreciation and (b) MACRS depreciation, complete the last four columns of the table below using an effective tax rate of 40 percent on an asset that has a first cost of $20,000 and a 3-year recovery period with no salvage value. Both cash flows are in units of $1000.