Copyright © 2008, The McGraw-Hill Companies, Inc.
- Suppose that a piece of offi ce equipment is purchased for $7,200. The useful life is 5 years and the salvage value is
$1,400. The equipment is placed in use at the end of September 2006. Create a table showing the depreciated value
of this equipment at the end of each calendar year, beginning with 2006 and ending when it reaches its salvage value. - Suppose that a company’s stock sells for $37.50. An investment analyst predicts that the stock price will rise at a
15% annual rate for the next 7 years. If this is correct, what will the price be in 7 years? - A mechanic purchased new equipment for $32,000, with a useful life of 5 years and a salvage value of $4,000.
Complete the table below to show the straight-line depreciated value of the equipment each year:
After the equipment has
been in use:The depreciated
value is
1 year
2 years
3 years
4 years
5 years- A mechanic purchased new equipment for $32,000, with a useful life of 5 years and a salvage value of $4,000. The
equipment was put into use 9 months before the end of 2006. Complete the table below to show the straight-line
depreciated value of the equipment each year:
At the end
of year:The depreciated
value is
2006
2007
2008
2009
2010
2011- A dairy farmer purchased a piece of equipment for $37,500. The useful life is 12 years and the salvage value is $3,775.
If he sells this equipment 7 years after buying it, how much will he get for it?
F. Additional Exercise- In the Book of Leviticus in the Jewish and Christian Bible, an unusual economic system is proposed. Every fi ftieth year
is to be a “Year of Jubilee,” in which many types of property are to return to their original owners. When the jubilee year
is far away, the price paid for an item would therefore be higher than when the jubilee year is close at hand.
Suppose that you owned a house that would be worth 1,000 shekels immediately after a jubilee year. How much would
I pay you for this house 17 years before the next jubilee year?
Exercises 8.4 373