Answered: A car was purchased in 1985 for $15000.…

A car was purchased in 1985 for $15000. Its value in current dollars depreciated steadily at a rate of 13% per year. What will be the car's value be at the beginning of 2003?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 21EA: Cinemar Productions bought a piece of equipment for $55,898 that will last for 5 years. The...

See similar textbooks

Related questions

Q: Kenzie Company purchased a 3-D printer for $318,000. Although this printer is expected to last for…

A: Double declining depreciation rate = Straight line depreciation rate x 2 = (100/3 years) x 2 =…

Q: A machine is valued at $10,000. If the depreciation at the end of each year is 40% of its value at…

A: Here we will use concept of depreciation to determine value of machine at the end of 4 years. we…

Q: Suppose a new car is purchased for $44,357 and depreciates by 24% over the first year of ownership.…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: The Dauten Toy Corporation currently uses an injection molding machine that was purchased 2 years…

A: Replacement project needs to calculate considering the sale of old asset today as well as if it is…

Q: The value of an automobile depreciates at the rate of 15% per year. What will be the value of an…

A: The business entity charges the depreciation expenses on their assets so that the assets in the…

Q: If a computer is bought by a company for $100 and is depreciated using the 3-year GDS recovery…

A: Depreciation: Depreciation is the concept applied on reporting of fall in original value of fixed…

Q: What is the book value of equipment purchased 7 years ago for $21,952 if it is depreciated using the…

A: Equipment cost = $ 21,952 Life = 10 Years Sum of years digit = (10*11)/2…

Q: A company buys an industrial lathe for $95,000. It has a useful life of 20 years and a salvage value…

A: Depreciation It is important for the entity to calculate the Depreciation cost to know the actual…

Q: Kenzie Company purchased a 3-D printer for $303,000. Although this printer is expected to last for…

A: Straight line depreciation rate=100%Estimated useful life=100%3 years=33.33%

Q: A certain car was purchased for $18,900. The car has a resale value of $12,300 after a useful life…

A: Depreciation is charged against the value of fixed assets. It can be calculated by using the…

Q: Pollyanna Publishing, a textbook publishing firm, purchased a new machine for $80,000. This machine…

A: Depreciation Rate for Double-Declining-Balance Method = Straight-Line Method Rate x 2 = (100 /…

Q: Suppose a new car is purchased for $45,357 and depreciates by 21% over the first year of ownership.…

A: Depreciation is a non cash expenditure. The asset wears off due to usage over its lifetime.…

Q: Asset A was purchased six months ago for $25,000 and has generated $1,500 cash flow during that…

A: In this question we need to find out the Holding period return for Asset A from the below…

Q: depreciation expense be for each year under the straight-line method?

A: Depreciation expense under straight-line method = (Cost - Residual value)/Expected useful life

Q: A property is sold for $7,600,000 and the mortgage balance at the time of sale is $3,600,000. The…

A: Depreciation recapture- It is a tax provision that powers the IRS to collect taxes on any profitable…

Q: Kenzie Company purchased a 3-D printer for $402,000. Although this printer is expected to last for…

A: Given information: Cost of 3D printer =$402,000 Salvage value = 30,000 Life = 3 years In the…

Q: A crane rental company has acquired a new heavy-duty crane for $260,000. The company calculates…

A: Depreciation is a non-cash expense which is incurred due to a continuous use of fixed asset.…

Q: Five years ago, a piece of equipment was purchased at a cost of $170,000, with a salvage value of…

A: Net present value is a technique to evaluate different investment proposals and select the best one.…

Q: A computer, printer, and copier were purchased for a total price of Php 250,000 on August 1, 2013.…

A: Depreciation is considered as an expense charge on the value of the Asset. It can be calculated by…

Q: You bought equipment for $110,000 3 years ago. Today you have an offer to sell your equipment for…

A: The question is based on the concept of depreciation and tax shield for depreciation of machine.

Q: Adams Company bought a piece of land in 1981 for $200,000. By 2005, its value had increased to $1…

A: Adams Company bought a piece of land in 1981 for $200,000. By 2005, its value had increased to $1…

Q: A machine is valued at $10,000. If the depreciation at the end of each year is 40% of its value at…

A: Given that;Value of the machine is $10000Depreciation at the end of each year is 40% of its value at…

Q: A small truck is purchased for $17,000. The truck is expected to be of use to the company for 6…

Q: The value of a piece of equipment depreciates exponentially. It cost $250,000 new. Each year it…

A: Purchase cost = $250,000 Depreciation rate (r) = 11% t = 5 Formula V(t) = Purchase cost (1-r)^t

Q: Mercury Drug purchased a Laboratory equipment for P 100,000 and plans to keep it for 15 years. If…

A: Depreciation is the allocation of cost of asset over the useful life of the asset. Several methods…

Q: he initial book value of a new computer is $74,000 and the computer is to be depreciated…

A: According to the straight-line depreciation method, an equal amount of depreciation expense is…

Q: A huge utility company paid P100,000 for five secondhand trucks from a smaller utility company. The…

A: As per the information provided : Purchased five secondhand trucks - P100,000 Automobiles purchased…

Q: An electronics balance costs P87,000 and has an estimated salvage value of P8,000 at the end of its…

A: Depreciation expense: Depreciation expense is the reduction in a particular asset due to its use or…

Q: A certain car was purchased for $25,00 has a resale value of $16,000 after a uset years. What is the…

A: Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets…

Q: The Darlington Equipment Company purchased a machine5 years ago at a cost of $85,000. The machine…

A: Calculation of Initial cash flow

Q: A property is sold for $6,200,000 and the mortgage balance at the time of sale is $3,600,000. The…

A: Depreciation recapture- It is a tax provision that powers the IRS to collect taxes on any profitable…

Q: Steven found that the value of his new car is currently $31,200 and will depreciate 6.9% per year.…

A: Value of new Car is $31,200 Depriciation rate is 6.9% Time period 5 years To Find: Value of Car…

Q: A crane rental company has acquired a new heavy-duty crane for $300,000. The company calculates…

A: Depreciation expense refers to the fall in the value of the asset due to passage of time, wear and…

Q: a car was purchased two years ago it value depreciates at 20% per annum if its present value is…

A: Calculation of depreciation per year: Present value * depreciation rate

Q: A machine can be purchased for $150,000 and used for five years, yielding the following net incomes.…

A: Payback period: It can be defined as the time that is taken by an investment before it starts…

Q: Suppose a new car is purchased for $45,357 and depreciates by 21% over the first year of ownership.…

A: Depreciation is the fall in the value of fixed assets due to normal wear and tear, the passage of…

Q: What is the book value of equipment purchased three years ago for $15,000 if it is depreciated using…

A: Equipment Cost is $15,000(Equipment purchased three years ago) Expected Project life is 5 years.…

Q: A certain car was purchased for $25,000. The car has a resale value of $16,000 after a useful life…

A: Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets…

Q: A truck was purchased for $58,000 and depreciates $6560 per year. Suppose that the vehicle is…

Q: a gaming room of a high-traffic video arcade wishes to determine the return on its video machine.…

A: Annual return is the amount earned during the period. It may be in form of increase in market value…

Q: Kenzie Company purchased a 3-D printer for $345,000. Although this printer is expected to last for…

A: Depreciation rate = (100% / 3 years)*2 = 66.67%

Q: One of the College of Engineering laboratories bought a machine for its purchasing value ($50000)…

A: Depreciation is an accounting technique for distributing a tangible or fixed asset's cost over its…

Q: On January 1, 2016, Pedro Reyes invested PHP250,000 on a delivery van. The car is expected to last…

A: Depreciation means the amount fixed assets written off due to normal wear and tear , normal usage ,…

Q: Sussman industries purchased a drilling machine for $50,000 and paid cash. Sussman expects to use…

A: Sussman industries purchased a drilling machine for $50,000 and paid cash.Part (A)So, the cash flow…

Q: mpany purchased a 3-D printer for $411,000. Although this printer is expected to last for ten years,…

A: Double Declining method of depreciation: It is a method in which assets are depreciated at twice the…

Q: The Dakuten Toy Corporation currently uses an injection molding machine that was purchased 2 years…

A: Net Present value is the capital budgeting technique which is calculated by taking subtracting the…

Q: Cinemar Productions bought a piece of equipment for $55,898 that will last for 5 years. The…

A: Cost of equipment = $ 55,898 Annual cash inflow = $ 14000 Period = 5 Years

Question

A car was purchased in 1985 for $15000. Its value in current dollars depreciated steadily at a rate of 13% per year. What will be the car's value be at the beginning of 2003?

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Cinemar Productions bought a piece of equipment for $55,898 that will last for 5 years. The equipment will generate net operating cash flows of $14,000 per year and will have no salvage value at the end of its life. What is the internal rate of return?
Taos Productions bought a piece of equipment for $79,860 that will last for 5 years. The equipment will generate net operating cash flows of $20,000 per year and will have no salvage value at the end of its life. What is the internal rate of return?
Alfredo Company purchased a new 3-D printer for $900,000. Although this printer is expected to last for ten years, Alfredo knows the technology will become old quickly, and so they plan to replace this printer in three years. At that point, Alfredo believes it will be able to sell the printer for $15,000. Calculate yearly depreciation using the double-declining-balance method.
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for ten years. Montello uses the straight-line depreciation method. Calculate the annual depreciation expense.
Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for eight years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After three years of recording depreciation, Montezuma determines that the delivery truck will only be useful for another three years and that the salvage value will increase to $4,000. Determine the depreciation expense for the final three years of the assets life, and create the journal entry for year four.
Montezuma Inc. purchases a delivery truck for $20,000. The truck has a salvage value of $8,000 and is expected to be driven for ten years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After five years of recording depreciation, Montezuma determines that the delivery truck will be useful for another five years (ten years in total, as originally expected) and that the salvage value will increase to $10,000. Determine the depreciation expense for the final five years of the assets life, and create the journal entry for years 6â€“10 (the entry will be the same for each of the five years).
The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?
Montello Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for eight years. Montello uses the straight-line depreciation method. Calculate the annual depreciation expense.
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.
Kenzie purchased a new 3-D printer for $450,000. Although this printer is expected to last for ten years, Kenzie knows the technology will become old quickly and so she plans to replace this printer in three years. At that point, Kenzie believes she will be able to sell the printer for $30,000. Calculate yearly depreciation using the double-declining-balance method.
A truck was purchased for $58,000 and depreciates $6560 per year. Suppose that the vehicle is depreciated so that it holds 60% of its value from the previous year. Write an exponential function of the form =yV0bt , where V0 is the initial value and t is the number of years after purchase.
Suppose a new car is purchased for $45,357 and depreciates by 21% over the first year of ownership. If the car is driven 12,470 miles in that year, what is the cost, in dollars per 100 miles driven, for depreciation? (Enter a number. Round your answer to the nearest cent.) dollars per 100 miles)