5. (Lecture note page 23-26, 34-37, see Excel version of the example for detail

Question

5. (Lecture note page 23-26, 34-37, see Excel version of the example for detail Capital eqipment costing $430,000 today has $80,000 accounting salvage value at the end of fifth yea a what is the remaining book value of the equipment at the end of second year? (0.5 pts) I1shsstraight-linc dkpeiation method is What will be the cash flow associased with the salc if the peoject terminaics afher the fifth year? (1 ps) b ifthe tax rate is 35%, you expect de equipment could be sold at $100,000 aher the fifth year

Explanation / Answer

Straight line method:

Depreciation = $430000 - $80000 / 5 years

= $70000

Cost of asset $430000

Depreciation $70000

Book value year end $360000

Depreciation $70000

Book value year end $290000

b.

Cost of asset $430000

Depreciation for5 years $350000

Book value at the year end $80000

Sale of asset $100000

Gain of asset $20000.

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