IME 345

Chapter 9 Homework Solution

PROBLEM 9.11
(3 points)
a

SLN
BASIS
EST SALV
RCVD SALV
EOY
0
1
2
3
4
5
6

$14,333.33
$14,333.33
$14,333.33
$14,333.33
$14,333.33
$14,333.33

SUM DEPR

$86,000.00

DDB
BASIS
EST SALV
RCVD SALV
EOY

$90,000.00
$4,000.00
$4,000.00
dt

$90,000.00
$4,000.00
$4,000.00

USEFUL LIFE
PERIODS

RATE
USEFUL LIFE
PERIODS

0
1
2
3
4
5
6

$30,000.00
$20,000.00
$13,333.33
$8,888.89
$5,925.93
$3,950.62

SUM DEPR

$82,098.77

SUM DEPR

EOY

$90,000.00
$4,000.00
$4,000.00
dt
EXC FUNC

0
1
2
3
4
5
6

$24,571.43
$20,476.19
$16,380.95
$12,285.71
$8,190.48
$4,095.24

SUM DEPR

$86,000.00

6
6

Bt
$90,000.00
$75,666.67
$61,333.33
$47,000.00
$32,666.67
$18,333.33
$4,000.00

Bt
EXC FUNC
$90,000.00
$60,000.00
$40,000.00
$26,666.67
$17,777.78
$11,851.85
$7,901.23

SYD
BASIS
EST SALV
RCVD SALV

dt
EXC FUNC

Spring 2012

SYD
USEFUL LIFE
PERIODS
Bt
EXC FUNC
$90,000.00
$65,428.57
$44,952.38
$28,571.43
$16,285.71
$8,095.24
$4,000.00

33.3333%
6
6
dt
CALC
$30,000.00
$20,000.00
$13,333.33
$8,888.89
$5,925.93
$3,950.62
$82,098.77

21
6
6

Bt
CALC
$90,000.00
$60,000.00
$40,000.00
$26,666.67
$17,777.78
$11,851.85
$7,901.23

IME 345

Chapter 9 Homework Solution

Spring 2012

PROBLEM 9.27
(3 points)
NOTE! THE SALVAGE VALUE OF $10,000 DOES NOT COME
INTO PLAY IN DETERMINING MACRS DEPRECIATION.
IT WILL BE A FACTOR IN AFTER-TAX CASH FLOW ANALYSIS.
a

MACRS-GDS(7)

BASIS
EST SALV
RCVD SALV

$120,000.00
$10,000.00
$10,000.00

USEFUL LIFE
PERIODS

8
8

EOY

dt

Bt

MACRS-GDS(7)

0
1
2
3
4
5
6
7
8

$17,148.00
$29,388.00
$20,988.00
$14,988.00
$10,716.00
$10,704.00
$10,716.00
$5,352.00

SUM DEPR

$120,000.00

BASIS
EST SALV
RCVD SALV

$120,000.00
$10,000.00
$10,000.00

USEFUL LIFE
PERIODS

8
8

EOY

dt

Bt

MACRS-GDS(7)

0
1
2
3
4
5
6

$17,148.00
$29,388.00
$20,988.00
$14,988.00
$10,716.00
$5,352.00

SUM DEPR

$98,580.00

$120,000.00
$102,852.00
$73,464.00
$52,476.00
$37,488.00
$26,772.00
$16,068.00
$5,352.00
$0.00

$120,000.00
$102,852.00
$73,464.00
$52,476.00
$37,488.00
$26,772.00
$21,420.00

14.29%
24.49%
17.49%
12.49%
8.93%
8.92%
8.93%
4.46%

14.29%
24.49%
17.49%
12.49%
8.93%
4.46%

IME 345

Chapter 9 Homework Solution

Spring 2012

PROBLEM 9.41
(4 points)
a

MACRS-GDS(39)

b, c

BASIS

$240,000.00

EST SALV
RCVD SALV

$0.00
$0.00

USEFUL
LIFE
PERIODS

40
40

EOY

dt

Bt

MACRSGDS(39)

$240,000.00
$237,175.20
$231,021.60
$224,868.00
$218,714.40
$212,560.80
$210,253.20

1.177%
2.564%
2.564%
2.564%
2.564%
0.962%

0
1
2
3
4
5
6

Note: Score the last problem as follows:

(a) 1 point if correct
(b) and (c ) 3 points as follows
year 1 1 point if correct
years 2-5 1 point if correct
year 6 1 point if correct

$2,824.80
$6,153.60
$6,153.60
$6,153.60
$6,153.60
$2,307.60