A small business purchases some office furniture for $43000 and will sell it for an estimated...

A small business purchases some office furniture for $43000 and will sell it for an estimated $6000 in 5 years. (Replace them with new furniture)

7. If the firm used the DDB depreciation, NPW =

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Expert Solution

Answer:

If the firm used the DDB depreciation, NPW = $ 3343.68

Calculation as below.

Book value of Asset =	$ 43,000.00
Life of the AsseT in years =	5

DDB Depreciation rate = 2 X Straight-Line Depreciation Percent = 40%

DDB depreciation for the period = 40% x Book Value at Beginning of the Period

Below is calculation table of NPW:

Year	Book Value	Depreciation	Depreciation	Accumulated	Book Value
	Year Start	Rate	Expense	Depreciation	Year End
1	$43,000.00	40%	$17,200.00	$17,200.00	$25,800.00
2	$25,800.00	40%	$10,320.00	$27,520.00	$15,480.00
3	$15,480.00	40%	$6,192.00	$33,712.00	$9,288.00
4	$9,288.00	40%	$3,715.20	$37,427.20	$5,572.80
5	$5,572.80	40%	$2,229.12	$39,656.32	$3,343.68

ekkarill92 answered 1 year ago

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