Question

machine A costs $64000 and depreciates on a 10-year schedule. IF the NEt fixed asset value...

machine A costs $64000 and depreciates on a 10-year schedule. IF the NEt fixed asset value of machine A in year8 will be the same as that of machine B in year 9 depreciating on a 15 year schedule, what does Machine B Cost?

a. 14000

b. 32000

c. 48000

d. 85333

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Answer #1

Machine A Cost - $64,000

By the end of 8 year, The Machine A would be depreciated by 80% (8 Years / Total Life of machine (10 Years) )

By the end of 9 th Year, The Machine B would be depreciated by 60% ( 9 Years / 15 Years)

If the Net fixed asset value of machine A in year8 will be the same as that of machine B in year 9 depreciating on a 15 year schedule is same then the machine B would worth

Value of Machine B= (Depreciated % of Machine B / Depreciated % of machine A) * Value of Machine A

= (60% / 80% ) * 64000

= (3/4) * 64000

= 48,000

Machine B would worth 48,000

Option C is the correct answer

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