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    Assignment - 8-Contemporary Engineering Economics

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    Dhiraj Nayak
    This document contains the solutions to several engineering economics assignment questions. It includes calculations for depreciation using the straight-line and double declining balance methods. For question 9.6, it shows the depreciation calculation across 5 years for an asset worth $132,000 using straight-line depreciation. For question 9.9, it calculates depreciation across 6 years using double declining balance, and notes the method switches to straight-line in year 5 to maintain the salvage value.

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    Assignment - 8-Contemporary Engineering Economics

    Uploaded by

    Dhiraj Nayak
    20 views3 pages
    This document contains the solutions to several engineering economics assignment questions. It includes calculations for depreciation using the straight-line and double declining balance methods. For question 9.6, it shows the depreciation calculation across 5 years for an asset worth $132,000 using straight-line depreciation. For question 9.9, it calculates depreciation across 6 years using double declining balance, and notes the method switches to straight-line in year 5 to maintain the salvage value.

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    Assignment -8-contemporary engineering economics

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    This document contains the solutions to several engineering economics assignment questions. It includes calculations for depreciation using the straight-line and double declining balance methods. For question 9.6, it shows the depreciation calculation across 5 years for an asset worth $132,000 using straight-line depreciation. For question 9.9, it calculates depreciation across 6 years using double declining balance, and notes the method switches to straight-line in year 5 to maintain the salvage value.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    20 views3 pages

    Assignment - 8-Contemporary Engineering Economics

    Uploaded by

    Dhiraj Nayak
    This document contains the solutions to several engineering economics assignment questions. It includes calculations for depreciation using the straight-line and double declining balance methods. For question 9.6, it shows the depreciation calculation across 5 years for an asset worth $132,000 using straight-line depreciation. For question 9.9, it calculates depreciation across 6 years using double declining balance, and notes the method switches to straight-line in year 5 to maintain the salvage value.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Name : Dhiraj Nayak (074BME615)

    4th Edition

    Assignment -8 Engineering Economics

    Q.9.6

    I = $132,000 S = $20,000 N =5 years


    Straight Line Method
    n Bn-1 Dn Bn
    1 $132,000 $22,400 $109,600
    2 $109,600 $22,400 $87,200
    3 $87,200 $22,400 $64,800
    4 $64,800 $22,400 $42,400
    5 $42,400 $22,400 $20,000

    Dn = (I-S)/N = (132000-20000)/5 = $22,400

    (b)

    I = $46,000 S = $10,000 N =5 years


    Double declining Balance Method
    α= 2/N = 0.4

    n Bn-1 Dn Bn
    1 $46,000 $18,400.0 $27,600.0
    2 $27,600.0 $11,040.0 $16,560.0
    3 $16,560.0 $6,560.0 $10,000.0
    4 $10,000.0 $0.0 $10,000.0
    5 $10,000.0 $0.0 $10,000.0

    Since the Bn value goes lower than the salvage value in


    the year4 .so, we balance the Dn so as to keep the
    salvage value to $10,000 at year 5.
    Depriciation in 2nd year = $11,040.0
    Book value at the end of 4th year = $10,000.0
    Q.9.7

    I=$150,000 N=Unspecified n =3
    Depriciation values
    n
    N=5 N=6 N=7
    α 0.4 0.333333333 0.28571429
    1 $60,000 $50,000 $42,857
    2 $36,000 $33,333 $30,612
    3 $21,600 $22,222 $21,866

    Q.9.9

    I = $68,000 S = $12,000 N =6 years


    Double declining Balance Method
    α= 2/N = 0.3333333

    DDB Method SL Method Switch to SL


    n Bn-1 Dn Bn Dn Decision
    1 $68,000 $22,666.67 $45,333.33 9333.333 Don't Switch
    2 $45,333.33 $15,111.11 $30,222.22 6666.667 Don't Switch
    3 $30,222.22 $10,074.07 $20,148.15 4555.556 Don't Switch
    4 $20,148.15 $6,716.05 $13,432.10 2716.049 Don't Switch
    5 $13,432.10 $1,432.10 $12,000.00 $716.05 Don't Switch
    6 $12,000.00 $0.00 $12,000.00 0 Don't Switch
    Depriciation in 1st 3 years = $47,851.85
    Here, the Bn value gets less than salvage value in the year 5, so Depreciation is
    managed so that salvage value remains at $12000 at the end of 6 years.
    Q9.11

    I = $46,000 S = $10,000 N =5 years


    Double declining Balance Method
    α= 2/N = 0.4

    n Bn-1 Dn Bn
    1 $46,000 $18,400.0 $27,600.0
    2 $27,600.0 $11,040.0 $16,560.0
    3 $16,560.0 $6,560.0 $10,000.0
    4 $10,000.0 $0.0 $10,000.0
    5 $10,000.0 $0.0 $10,000.0

    Since the Bn value goes lower than the salvage


    value in the year4 .so, we balance the Dn so as
    to keep the salvage value to $10,000 at year 5.
    Depriciation in 2nd year = $11,040.0
    Book value at the end of 4th year = $10,000.0

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