The number of years n for a piece of machinery to depreciate to a known salvage value
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where s is the salvage value of the machinery, i is its initial value, and d is the annual rate of depreciation.
(a) How many years will it take for a piece of machinery to decline in value from $90,000 to $10,000 if the annual rate of depreciation is 0.20 (20%)?
(b) How many years will it take for a piece of machinery to lose half of its value if the annual rate of depreciation is 15%?
Salvage ValueSalvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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