You are a manager of a company that just spent $80,000 to purchase a piece of equipment that is expected to function for six years. If you can borrow money at 7%, what is the present discounted value of the depreciation allowance under the following circumstances?
a. You can expense the investment.
b. You depreciate using straight-line depreciation methods.
c. You depreciate over four years using accelerated straight-line depreciation methods.
d. You depreciate using an augmented accelerated method in which half of the asset value is depreciated immediately and the other half is straight-line depreciated over the remaining three years.

  • CreatedApril 25, 2015
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