The company recently reached a tentative agreement (called a memorandum of understanding) with the Brunei government, allowing it to build a facility in Brunei to receive and distribute its products for the next six years. The plant and equipment will cost 2 million Brunei dollars. Fixed costs are estimated to be 200,000 Brunei dollars per year, and variable costs (including labour and materials) are estimated to be 1 Brunei dollar per pound. Shipping of the product will cost about $100,000 Canadian per year. The plant and equipment can be depreciated over a 10-year period on a straight-line basis. At the end of the sixth year, the fixed assets can be sold for an estimated $860,000, with any depreciation recapture taxable at 30%. The corporate tax rate in both countries is 30%. The project will also require an investment of net working capital of $250,000 Canadian at the start of the project, which will be recovered at the end of the sixth year. The weighted average cost of capital for Blooming Blueberries is around 16%. The company can borrow funds from its bank at an interest rate of 8%.

WHAT IS THE DEPRECIATION CALCULATION per year ?

is it $60,000 Brunien dollar per year or else

My cal was 2,000,000/10yrs =200,000 of this is 30% tax which is 60,000 brunein Dollar.

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Answer rating: 100% (QA)

You are correct The annual depreciation expense for the plant and equipment is 200000 Brunei dollars ... View the full answer