The ACME company has purchased some office furniture costing $13,500 and is expected to have a...

The ACME company has purchased some office furniture costing $13,500 and is expected to have a salvage value of $2,000 at the end of 7 years.

(a) Compute the depreciation for each of the years of its life using: (i) SYD, (ii) DDB, and (iii) MACRS method (life for furniture in MACRS is 7 years)

(b) Compute the NPV of the depreciation schedule for each of the three methods using i = 10%.

(c) Considering the NPV values, which method would you recommend.

Expert Solution

Calculation of Depreciation and NPV using SYD method

Calculation of Depreciation and NPV using DDB method

Calculation of Depreciation and NPV using MACRS method

As per calculation above MACRS method should be used as it has hight NPV as compared to another depreciation method.

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jeff jeffy answered 1 year ago

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