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SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.

Answer the question.

1) A coil winding and unwinding machine that costs $32,000 has a life of 9 years with a $4000 salvage value. Use
classical straight line depreciation to determine the book value after 7 years.
Answer: BV7 = $10,222.23

2) An inspecting and profiling web controller that costs $40,000 has a life of 8 years with a $5000 salvage value.
The estimated annual operating and maintenance cost is $3700 per year. Use classical straight line depreciation
to determine the annual depreciation at the end of year 5.
Answer: d 5 = $4375.00

3) A viscosity sensing instrument costs $46,000 and has a $5500 salvage value with a 7-year recovery period. The
estimated annual operating cost is $3000 per year. Use classical straight line depreciation to calculate the
cumulative depreciation and a book value at the end of year 6.
Answer: Accumulated depreciation at year 6 = $34,714.26

BV6 = $11,285.74

4) A $22,000 flow measurement instrument was installed and depreciated for 9 years and was sold for $4500. If
the double declining balance method of depreciation is used, determine the difference between the book value
and the market value at the end of year 9.
Answer: BV9 = $2351.12
MV9 - BV9 = $2148.88

5) Aggie Research Laboratory purchased a new High Performance Liquid Chromatography (HPLC) unit for
$39,000. The unit has a functional life of 5 years and a salvage value of 10% of the purchased price. Using
declining balance depreciation at a rate of 1.5 times the straight line rate, determine the annual depreciation at
the end of year 2.
Answer: d2 = $8190.00

6) A piece of liquid handling equipment that costs $10,000 has a $3000 salvage value. Using MACRS depreciation
with a 3-year recovery period, calculate the accumulated annual depreciation at the end of year 3.
Answer: Accumulated depreciation = $9259.00

7) A petroleum refining and recovery service company, Cowboy Enterprises, purchased $13,000 worth of
equipment for reconditioning fuels in its storage tanks. The equipment has a functional life of 14 years and a
salvage value of 5% of the purchased price. Use MACRS depreciation with a 10-year recovery period to
determine the book value after 4 years.
Answer: BV4 = $5990.40

8) An uninterruptible power system used in a small production facility at Acme Manufacturing has a basis of
$56,000 and is expected to have $5750 salvage value after 125,000 hours of use. Calculate the depreciation rate
per hour of use and the book value after 77,000 hours of operation.
Answer: Depreciation per unit of production = $0.40 per hour
BV = $25,200.00

1
 9) For depreciation purposes, a 150% declining balance depreciation is used for a material handling lift truck with
a cost basis of $23,000 and a salvage value of $6250 at the end of its useful life of 5 years. If the MACRS
depreciation method with a 3-year recovery period is used for tax purposes, determine the difference between
the annual depreciation after 2 years calculated from both depreciation methods.
Answer: DB: d 2 = $4830.00
MACRS: d2 = $10,223.50
The difference = $5393.50

10) A machine used in the manufacture of fabricated metal products at Crimson Tide Inc., with a useful life of 12
years, is to be depreciated by the MACRS method for tax depreciation purposes. The machine has a first cost of
$23,000 with a $3000 salvage value. The company's controller wants to understand the effects of the difference
in the annual depreciation charge for SL and MACRS with GDS recovery period. Using a half-year convention
for both methods, determine the differences in the book value if the machine is sold at the end of year 5.
Answer: SL: BV5 = $15,499.99
MACRS: BV5 = $6158.25
The difference = $9341.74

11) A laboratory centrifuge costs $79,000 and has a $5530 salvage value with an 8-year recovery period. The
estimated annual operating cost is $7000 per year. Use the double declining balance method with switch over to
straight line to tabulate the depreciation schedule at the end of each year.
Answer:
Year BVk-1 DDB SL dk
1 79,000.00 19,750.00 9183.75 19,750.00
2 59,250.00 14,812.50 7674.29 14,812.50
3 44,437.50 11,109.38 6484.58 11,109.38
4 33,328.12 8332.03 5559.62 8332.03
5 24,996.09 6249.02 4866.52 6249.02
6 18,747.07 4686.77 4405.69 4686.77
7 14,060.30 3515.08 4265.15 4265.15
8 9795.15 2448.79 4265.15 4265.15

12) New spray coating equipment costs $24,000 is to be used in an oversea shipyard. It has a 12-year life and an
estimated salvage value of $4750. If the global naval shipbuilding company uses MACRS with an ADS
recovery period to calculate the depreciation and book value for the new coating equipment, determine the
annual depreciation and book value at the end of year 7.
Answer: d7 = $2000.00
BV7 = $11,000.00

13) Seminole Lighting, a specialty lamps and specialty light sources manufacturer, had the following information
on its annual tax returns. Determine Seminole's taxable income and calculate the federal income tax for the
year.
Sales $650,000
Interest Revenues $8500
Operating Expense $53,000
Depreciation $6500
Answer: TI = $599,000.00
Income tax = $203,660.00

2
14) ADD Systems Corp. reported a gross income of $590,000, and depreciation and expenses total $225,000 for the
year. If the state income tax is 6% per year, determine the average federal tax rate and overall effective tax rate.
Answer: Average federal tax rate = 34.00%
Effective tax rate = 37.96%

15) Mountaineer Transportation, Inc. had the following information at the end of the year. For an effective federal
tax of 38% and state income tax of 7.5% per year, determine the company's BTCF, ATCF, and NOPAT for the
year.
Total Revenues $550,000
Operating Expenses $130,000
Depreciation $111,000
Answer: BTCF = $420,000.00
ATCF = $288,211.50
NOPAT = $177,211.50

16) A Caribbean cruise line has purchased a new cruise ship for $670,000 and expects to realize a net revenue of
$190,000.00 each year for the next 10 years. The estimated salvage value of the ship at the end of its useful life of
10 years is $52,000. Assume an effective federal tax of 40%, state income tax of 10.75% per year, and an
after-tax MARR of 14% per year. Calculate the present worth of ATCF if a straight-line depreciation method is
used.
Answer: PW = $17,956.05

17) Bulldog Shipping, Inc. has purchased new cargo containers for $500,000. MACRS with a 5-year recovery
period and an estimated salvage value of $96,000 is to be used to write off the capital investment. The company
expects to realize net revenue of $170,000 each year for the next 6 years. Assume an effective federal tax of 38%,
state income tax of 10.5% per year, and an after-tax MARR of 13% per year. Calculate the present worth of this
investment.
Answer: PW = $63,264.58

18) A plantation has purchased an automated propagation system for $26,000. The declining balance depreciation
at a rate of 2 times the straight line rate and a $2022 salvage value are used to write off the capital investment.
The company expects to realize net revenue of $8000 each year for the next 5 years. Assume an effective federal
tax of 39%, state income tax of 12.25% per year, and an after-tax MARR of 4% per year. Calculate the present
worth of this investment.
Answer: PW = $5008.01

3
19) A manufacturer of printed circuit boards is considering purchasing a new surface mount technology component
placement system. Two machines are under consideration and the following information is prepared for the
economic evaluation. If the company's after-tax MARR of 12% per year and MACRS with a 7-year recovery
period is used, determine which alternative is preferred on the basis of their after-tax annual worth. Assume an
effective tax of 35% per year.

Machine Q R
First costs $380,000 $395,000
Net annual revenue $150,000 in year 1, increasing by $500 per $152,500
year thereafter
Market value at the end of the useful life $4000 0
Life, years 8 10

Answer: AWQ(12%) = $40,392.67

AWR(12%) = $45,882.31

Alternative R is preferred.

20) A construction company has an effective income tax rate of 39%. The company must purchase one of the
following two cement mixers for its new project. The after-tax MARR is 10% per year. Select a cement mixer
on the basis of after-tax present worth analysis using MACRS with a 5-year recovery period.
Machine Mixer 1 Mixer 2
First costs $22,000 $37,000
Annual benefits $23,000 $25,500
Market Value at the end of the useful life $2000 $2800
Life, years 6 6

Answer: PW1 (10%) = $46,426.57

PW2 (10%) = $42,867.19

Mixer 1 should be selected.

21) A logistics company is deciding between two models of semi-trailer trucks to add to its fleet. The manager has
prepared the following information for the economic evaluation. The new trucks are to be used for 7 years and
sold for the estimated salvage value. The before-tax MARR is 16.39% per year and the effective tax rate is 39%.
Select a machine on the basis of after-tax annual worth analysis using MACRS with a 5-year recovery period.

Alternative P1 P2
First costs $245,000 $230,000
Net annual benefits $155,000 $140,000
Salvage value $44,500 $37,500
Life, years 10 10

Answer: AWP1 (10%) = $62,261.12

AWP2 (10%) = $54,813.17
P1 should be selected.

4
22) A private metropolitan mass transit system operator wants to add a new trolleybus to its fleet. The following
information is prepared for the economic evaluation. Either trolley is to be used for 8 years and sold for the
estimated salvage value. The before-tax MARR is 12.31% per year and the effective tax rate is 35%. Using SL
depreciation, select a machine on the basis of after-tax annual worth analysis.

Alternative T1 T2
First costs $490,000 $475,000
Annual benefits $110,000 $93,000
Salvage value $39,000 $34,000
Useful life, years 10 8

Answer: AWT1 (8%) = $8658.58

AWT2 (8%) = $289.75

Select T1.

23) A low-cost airline operating in South Africa is considering adding either Boeing 737-400 or Boeing 737-800 to
its fleet. The following information is prepared for the economic evaluation. Either aircraft is to be used for 5
years and sold for the estimated salvage value. Assume the double declining balance is used for tax purposes in
this country and the airline's before-tax MARR is 6.00% per year and the effective tax rate is 35%. Select a
machine on the basis of after-tax present worth analysis.

Alternative 737 -400 737-800

First costs $390,000 $475,000
Annual benefits $330,000 $405,000
Salvage value $234,000 $234,000
Life, years 8 10

Answer: PW400 (4% = $805,391.27

PW800 (4%) = $967,949.71

Select Boeing 737-800.

24) An engineer-to-order manufacturer is considering purchasing new equipment for its film adhesive assembly.
The initial cost of the equipment is $12,100 and annual maintenance costs are estimated to be $185,000 per year.
Annual operating costs will be in direct proportion to the hours of use at $12 per hour. The expected annual
revenue is $220,000 per year. The equipment has a salvage value of $500 at the end of 5 years. What is the
maximum annual hours of use for which the equipment is economically justified? Use straight-line
depreciation, an effective tax rate of 39%, and an after-tax MARR of 16% per year.
Answer: X = $2545.38

5
25) An piece of automated assembly equipment has an initial cost of $64,000 and generates net annual benefits of
$150,000 per year. The equipment is expected to have zero salvage value at the end of its useful life of 5 years.
Using straight-line depreciation, an after-tax MARR of 2%, a federal tax rate of 39%, and a state tax rate of 9%,
determine if the investment in this equipment is economically justifiable on the basis of the present worth of the
EVA estimates.
Answer: PW(2)% = 355,303.51

The investment in the equipment is justifiable.

26) A construction company has an effective income tax rate of 38%. The company must purchase one of the
following two models of tower cranes for its new project. The after-tax MARR is 12% per year. Select a crane
on the basis of present worth of the EVA estimates using MACRS with a 5-year recovery period.

Machine Model Q Model R

First costs $21,000 $22,000
Net Annual Revenue $15,500 $15,800
Market Value at the end of useful life $1100 $2100
Life, years 6 6

Answer: PWQ (12%) = $24,745.86

PWR (12%) = $25,938.43

Model R should be selected.

27) A manufacturer of hardboard and fiber cement sidings and panels purchased new equipment for its new
product line for $20,000. A declining balance depreciation at a rate of 1.5 times the straight line rate with a
5-year recovery period and an estimated salvage value of $8000 was used to write off the capital investment.
The company expects to realize net revenue of $57,000 each year for the next 5 years. However, due to the
sudden change in business direction, the company decided to sell the equipment after 2 years of operation for
$21,000. Assuming an effective tax of 40% and an after-tax MARR of 12% per year, calculate the future worth
of the after-tax cash flow at the end of year 2.
Answer: FW (12%) = $68,304.00

28) A company purchased modular office furniture for its two new office branches, A and B. MACRS with a 7-year
recovery period was used to write off the investment. The following information was prepared for the economic
evaluation.

Alternative A B
First costs $35,000 $44,500
Annual maintenance costs $1500 in year 1 and increasing by $12,000
$150 each year thereafter
Salvage value $3100 -
Life, years 8 8

However, the company expects to close branch A and sell the furniture at the end of year 5 for $20,000.
Determine which is the better alternative based on an after-tax annual worth analysis with an effective tax of
40% and an after-tax MARR of 8% per year.
Answer: AWA (8%) = -$5032.99
AWB (8%) = -$12,569.59
Alternative A is a better alternative.

6
29) A nuclear power plant is planning to replace the outdated equipment with more environmental-friendly
equipment. The new equipment has an initial cost of $410,000. The equipment is expected to yield an annual
savings of $190,000 each year for the first 4 years and $191,200 each year thereafter. The MACRS with a 15-year
recovery period is to be used for tax purposes. Should the equipment be purchased if the equipment will be
sold for $148,263.00 at the end of year 10? Assume an effective tax of 38% and a before-tax MARR of 16.13% per
year.
Answer: PW = $432,628.96

PW (10%) > 0; therefore, the equipment should be purchased.

7
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Temperature of head in,

1036

1037

Trophic disturbances and disturbances of respiration,

1044

Vertigo in,

1034

Vomiting in,

1030

1034

Will, impairment of, and defects of speech,

1038

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1066

Ergot, cannabis indica, and hyoscyamus, use,

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1090

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1098

from caries of spinal vertebræ,

1099

from hysteria,

1100
 from metallic and infectious diseases,

1100

from spinal congestion, hemorrhage, and meningitis,

1098

from traumatism, sclerosis, aneurism, and neuritis,

1100

localization of spinal tumors,

1100-1106

Duration and termination,

1106

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1090

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Traumatism, influence of,

1090

Pathology,

1096

characters, seat, and varieties of tumors,

1096-1098

vascular changes,

1098

Symptoms,

1091

Ataxia and atrophy in,

1094
 Bladder, urinary and sexual disorders,

1096

Eye disorders,

1096

Headache in,

1096

Mental disturbances in,

1096

Pain, seat and characters,

1091

1092

Paralysis and paresis,

1091-1093
 Reflexes, altered in,

1094

Sensation, alterations of,

1091-1093

Sense of constriction about waist,

1091-1093

Spasms and twitchings in,

1091

1092

1094

Temperature of body in,

1095

Vomiting in,
1096

Treatment,

1106

Tumors, phantom, in hysteria,

255

Turpentine, use of, in neuralgia,

1229

Tympanites, hysterical,

240

Typhoid fever as a cause of abscess of the brain,

799
 of anæmia of the brain,

781

Typhus fever as a cause of hyperæmia of the brain,

768

U.

Ulcer of foot in tabes dorsalis,

839

Ulcerations in nervous diseases,

58
Ulcers, perforating, of the foot,

1273

Unconsciousness, in cerebral meningeal hemorrhage,

712

Unilateral catalepsy, symptoms,

324

epilepsy,

482

facial atrophy, progressive,

693

preponderance of symptoms in cerebral anæmia,

784
 spinal paralysis,

1165

Urine, state of, in brain tumors,

1045

in cerebral hemorrhage and hemiplegia,

961

in chronic lead-poisoning,

682

in epilepsy,

480

in general paralysis of the insane,

195

in hysteria,
253

in myxœdema,

1272

in neuralgia,

1212

1213

in symmetrical gangrene,

1260

in tabes dorsalis,

835

in the chloral habit,

662

in the opium habit,

654

658

659

Uterine and ovarian irritation as a cause of reflex paralysis,

807

Uterus and ovaries, neuralgia of,

1240

V.

Vaginismus, hysterical,

246
Valleix's painful points in migraine,

408

Varieties of hystero-epilepsy,

290

Vaso-constrictors, action of,

1243

Vaso-dilators, action of,

1244

Vaso-motor cerebral disturbances in general paralysis of the insane,

179
 disturbances in writers' cramp,

520

nerves, origin of,

1246

ASO-MOTOR

EUROSES

1242

Course,

1254

Diagnosis,

1252
 Pathogenesis,

1242

Physiology,

1242

Local vascular tone in,

1242

Medullary centres in,

1250

Origin of the vaso-motor nerves,

1246

Vaso-constrictors,

1243

Vaso-dilators,
1244

Vaso-motor reflexes,

1248

Vaso-motor tracts,

1249

Prognosis,

1255

Symptoms,

1252

Acrodynia,

1254

Angio-spasm and angio-paralysis,

1252
 Cutaneous angio-neuroses,

1252-1254

Digiti mortui and gangrene,

1252-1254

Erythromelalgia,

1253

Functional, derangements of internal viscera,

1254

Ruptured capillaries in,

1253

Sensation, disturbances of,

1252

1253
 Taches cérébrales in,

1253

Treatment,

1255

Amyl nitrite and nitro-glycerin,

1256

Chloral hydrate and chloride of potassium in,

1256

Rest, massage, and electricity in,

1255

Vaso-motor and trophic neuroses,

1241

Definition,
1241

Reflexes,

1248

Symptoms of general paralysis of the insane,

189

Theory of pathology of hysteria,

211

Tracts of the spinal cord,

1249

Venous congestion in cerebral hyperæmia,

768

Ventricles of brain in cerebral anæmia,