A new hybrid car was purchased by Pedernales Electric Cooperative as a courier vehicle to transport items between its 12 city offices. The car cost $35,000 and was retained for 5 years. Alternatively, it could have been retained for 100,000 miles. Salvage value is nil. Five-year DDB depreciation was applied. The car pool manager stated that he prefers UOP depreciation on vehicles because it writes off the first cost faster. Use the actual annual miles driven, listed below, to plot the book values for both methods. Determine which method would have removed the $35,000 faster. Show hand or spreadsheet solution, as instructed. Year 1 2 3 4 5 Miles driven, 1000 15 22 16 18 25

Question

A new hybrid car was purchased by Pedernales
Electric Cooperative as a courier vehicle to
transport items between its 12 city offices. The
car cost $35,000 and was retained for 5 years.
Alternatively, it could have been retained for
100,000 miles. Salvage value is nil. Five-year
DDB depreciation was applied. The car pool
manager stated that he prefers UOP depreciation
on vehicles because it writes off the first
cost faster. Use the actual annual miles driven,
listed below, to plot the book values for both
methods. Determine which method would have
removed the $35,000 faster. Show hand or
spreadsheet solution, as instructed.
Year 1 2 3 4 5
Miles driven, 1000 15 22 16 18 25

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