Question

Conce 11. A machine bas a first cost of $150,000. Its service life is 10 years when it can be sold for $30,000. Annual maintenance costs are $2,500. At years 4 and 8. It will require major servicing at a cost of $20,000 each. What is the equivalent annual cost of owning and operating this machine, assuming that the rate is 10%? A) 27.000 B) 25.900 C) 28.680 D) 25 570​

Answer 1

Answer:

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Answer 2

Under straight line method of depreciation, depreciation expense is calculated as below:

Depreciation = (Cost of Asset - Scrap value)/ Estimated useful life

Depreciation = (Rs. 252000 - Rs. 12000) / 6 years

Depreciation = Rs. 240000 / 6 years

Depreciation = Rs. 40000