If a company adds 60 new workstations at a cost of $100,000 each and also spends...

If a company adds 60 new workstations at a cost of $100,000 each and also spends $20 million for additional space in its camera/drone assembly facilities to accommodate more workstations, then its annual depreciation costs will rise by?

How do I know what deprecijation rate to use? *** (ie. 4% or 5%)

Solutions

Expert Solution

Sol:

Number of workstations = 60

Cost of each workstations = $100000

Additional Costs = $20000000

Computation of Total Cost = Total work stations cost + Additional costs

= ($100000 x 60) + $20000000

= $6000000 + $20000000

= $26000000

Assume, Depreciation rate is 5%

Deprecation = Total Cost x Depreciation rate

= $26000000 x 5%

= $1300000

Note: Here depreciation rate is assumed 5%, you can also assume 10%. But generally 5% is taken for unknown rate. But here we can also refer to depreciation rate table for more specific rates.

jeff jeffy answered 2 years ago

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