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Santos ECO Fin HW02

This document provides directions for a final homework assignment on engineering economics. It includes 4 questions calculating depreciation using straight-line depreciation. Question 1 requires creating a depreciation table for an asset over 7 years. Question 2 calculates annual depreciation and book value after 10 years. Question 3 finds total depreciation and book value after 5 years. Question 4 determines depreciation charge for 3 years, depreciation reserve after 3 years, and book value after 3 years for delivery jeeps.

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deanyangg25
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646 views

Santos ECO Fin HW02

This document provides directions for a final homework assignment on engineering economics. It includes 4 questions calculating depreciation using straight-line depreciation. Question 1 requires creating a depreciation table for an asset over 7 years. Question 2 calculates annual depreciation and book value after 10 years. Question 3 finds total depreciation and book value after 5 years. Question 4 determines depreciation charge for 3 years, depreciation reserve after 3 years, and book value after 3 years for delivery jeeps.

Uploaded by

deanyangg25
Copyright
© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
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TCCB 421 - ENGINEERING ECONOMICS

Final Homework 01
Directions:
a) Solve the following questions
b) Filename format: Surname_ECO_Fin_HW01
b) Submit in PDF format as one file.
Questions:

1. Prepare a depreciation table for an asset which was bought at Php15,000 and useful for

a period of 7 years. Estimated salvage value is 10% of its original cost.

Given:

𝑉 = 15 000 𝑛=7 𝑉𝑠 = 0. 1 * 15 000 = 1500

Solution:

𝑉−𝑉𝑠 15000 − 1500 𝑑 = 1928. 57


𝑑= 𝑑= 7
𝑛

TABLE:

Year Value Depreciation Total Value at the end


During Depreciation of Year

1 15 000 1928.57 1928.57 13 071.43

2 13 071.43 1928.57 3857.14 11 142.86

3 11 142.86 1928.57 5785.71 9214.29

4 9214.29 1928.57 7714.28 7285.72

5 7285.72 1928.57 9642.85 5357.15

6 5357.15 1928.57 11571.42 3428.58

7 3428.58 1928.57 13499.99 1500.01


2. Equipment bought for Php60,000 is expected to last for 30 years. If the book value after

20 years is Php20,000, how much is the depreciation each year? Find the book value

after 10 years.

Given:

𝑉 = 60 000 𝑛 = 30 𝑉20 = 20 000

Solution:

𝑉𝑎 = 𝑉 − 𝑎𝑑 @𝑛 = 10

20 000 = 60 000 − 20𝑑 𝑉10 = 60 000 − 10(2000)

20𝑑 = 60 000 − 20 000 𝑉10 = 60 000 − 20 000

40 000
𝑑= 20 𝑉10 = 40 000

𝑑 = 2000
3. A machine which costs Php10,000 was sold as scrap after being used for 10 years. If the

scrap value was Php500, determine the total depreciation and book value at the end of

the 5th year.

Given:

𝑉 = 10 000 𝑉𝑠 = 500 𝑛 = 10

Solution:

𝑉−𝑉𝑠 𝑉𝑎 = 𝑉 − 𝑎𝑑
𝑑= 𝑛

10 000− 500 𝑉5 = 10 000 − (5)(950)


𝑑= 10

9 500
𝑉5 = 10 000 − 4750
𝑑= 10

𝑉5 = 5 250
𝑑 = 950
4. Delivery jeeps purchased by KH Company cost Php180,000 each. Past records indicate

that jeeps should have an economic life of 10 years. They can be sold from an average of

Php50,000 each year after 10 years of use. The company receives 9% interest on

investment funds. Using straight line method: Determine:

a. the depreciation charge during 3 years

b. the depreciation reserve accumulated at the end of 3 years

c. book value at the end of 3 years.


Given:
𝑉 = 180 000 𝑉𝑠 = 50 000 𝑖 = 0. 09

𝑛 = 10
Solution:
a. the depreciation charge during 3 years
𝑉−𝑉𝑠
𝑑= 𝑛

180 000−50 000


𝑑= 10

𝑑 = 7000
b. the depreciation reserve accumulated at the end of 3 years

𝐷= 𝑑*𝑎

𝐷 = 7000 * 3

𝐷 = 21 000

c. book value at the end of 3 years.

𝑉𝑎 = 𝑉 − 𝑎𝑑

𝑉3 = 180 000 − (3)(7000)

𝑉3 = 159 000

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