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1. 1) Why would you switch from double declining balance to straight line deprec

ID: 1173283 • Letter: 1

Question

1.       1) Why would you switch from double declining balance to straight line depreciation?

2.       2) Can you depreciate assets below their salvage value?explain?

3.       3) Project A+ has the following probability distribution of expected future returns.

Probability

Net Future   Worth

.1

-$12,000

.2

4,000

.4

12,000

.2

20,000

.1

30,000

a.       What is the expected future worth for Project A+?

b.      What is the standard deviation of expected future worth for Project A+?

ALL THREE QUESTIONS ARE NOT RELATED TO EACH OTHER.

Explanation / Answer

1. Each year comparisons are made between the declining balance rate