Course: Value Design, Book: Engineering Economy 15th edition. A concrete and roc
ID: 2476751 • Letter: C
Question
Course: Value Design, Book: Engineering Economy 15th edition.
A concrete and rock crusher for demolition work has been purchased for $650,000, and it has an estimated market value of $250,000 at the end of its fifteen-year life. Engineers have estimated that the following units of production (in cm3 of crushed material) will be contracted over the next fifteen years. Using the units of production depreciation method,find the following:
EOY
cm3
a. Depreciation allowance in year nine.
1
175,000
b. BV at the end of year thirteen.
2
300,000
3
237,500
4
112,500
5
162,500
6
181,250
7
206,250
8
243,750
9
254,375
10
190,000
11
195,000
12
197,000
13
197,500
14
208,315
15
312,500
EOY
cm3
a. Depreciation allowance in year nine.
1
175,000
b. BV at the end of year thirteen.
2
300,000
3
237,500
4
112,500
5
162,500
6
181,250
7
206,250
8
243,750
9
254,375
10
190,000
11
195,000
12
197,000
13
197,500
14
208,315
15
312,500
Explanation / Answer
Depreciation per Units ( Cost- Salavage)/ Estimated Units ( 650000-250000)/3173440 0.126046183 EOY CM3 Depreciation Book Value 1 175000 22058.08 627941.92 2 300000 37813.85 590128.06 3 237500 29935.97 560192.09 4 112500 14180.20 546011.90 5 162500 20482.50 525529.39 6 181250 22845.87 502683.52 7 206250 25997.03 476686.50 8 243750 30723.76 445962.74 9 254375 32063.00 413899.74 10 190000 23948.77 389950.97 11 195000 24579.01 365371.96 12 197000 24831.10 340540.86 13 197500 24894.12 315646.74 14 208315 26257.31 289389.43 15 312500 39389.43 250000.00 3173440 The depreciation at year 9 is $ 32063 & book value is $ 413899