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Your company purchases two machines, which cost $4,000 and $9,000, respectively. They have linear straight-line depreciation...

Your company purchases two machines, which cost $4,000 and $9,000, respectively. They have linear straight-line depreciation schedules of 7 and 5 years, respectively. What is the present value of the depreciation, given a cost of capital of 5.8%?

Solutions

Expert Solution

Solution :

The present value of depreciation of Machine 1 = $ 3,212.73

= $ 3,213 ( when rounded off to the nearest whole number )

The present value of depreciation of Machine 2 = $ 7,623.69

= $ 7,624 ( when rounded off to the nearest whole number )

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 1 year ago
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