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Under the assumption that Idekos market share will increase by 0.5% per year (and the investment and

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Under the assumption that Ideko€™s market share will increase by 0.5% per year (and the investment and financing will be adjusted as described in Problem 3), you project the following depreciation:

Under the assumption that Ideko€™s market share will increase by

Using this information, project net income through 2010 (that is, reproduce Table 19.7 under the newassumptions).

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Year 2005 2006 2007 2008 2009 2010 Fixed Assets and Capital Investment S 000) 2 New Investment 3 Depreciation 5,000 (5,500 5,450 (5,405 5,365 (5,328) 6,795) 5000 5,000 5,000 5,000 20.000

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Year 2005 2006 2007 2008 2009 2010 INCOME STATEMENT 000s 1 Sales 75000 ...View the full answer


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Mugdha Sisodiya
My self Mugdha Sisodiya from Chhattisgarh India. I have completed my Bachelors degree in 2015 and My Master in Commerce degree in 2016. I am having expertise in Management, Cost and Finance Accounts. Further I have completed my Chartered Accountant and working as a Professional. Since 2012 I am providing home tutions.
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Corporate Finance

Corporate Finance

ISBN: 978-0133097894

3rd edition

Authors: Jonathan Berk and Peter DeMarzo

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Depreciation of non-current assets is the process of allocating the cost of the asset over its useful life. The cost of the asset includes the purchase price, any additional costs incurred to bring the asset to its current condition and location, and any other costs that are directly attributable to the asset. The useful life of the asset is the period over which the asset is expected to be used by the company. To calculate the depreciation, companies use different methods such as straight-line, declining-balance, sum-of-the-years\'-digits, units-of-production, and group depreciation. The chosen method will depend on the type of asset, the company\'s accounting policies, and the accounting standards that are applicable. The straight-line method allocates an equal amount of the asset\'s cost over its useful life, while the declining-balance method calculates depreciation at a fixed rate, typically double the straight-line rate, but the amount of depreciation decreases over time. The sum-of-the-years\'-digits method is similar to the declining-balance method, but the rate of depreciation is calculated using a fraction that is based on the useful life of the asset. It\'s important to note that the depreciation expense will be recorded on the company\'s income statement and the accumulated depreciation will be recorded on the company\'s balance sheet. This will decrease the value of the asset on the balance sheet over time.

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