Engineering Economy

ENGR 3970/ET 5970970 Homework Assignment #3 – Spring 2019 Note: Show all of your work to arrive at a final result.

1) Using sum-of-the-years-digits depreciation, determine the depreciation schedule for an asset that has an initial cost of $140,000, a salvage value of $20,000, and a depreciation life of three years.

2) An asset has an initial cost of $60,000, a salvage value of $5,000, and a depreciation life of 6 years.

a) Determine the book value for year 3 using sum-of-the-years-digits depreciation.

b) Determine the depreciation for year 3 using double declining balance depreciation.

c) Determine the equivalent annual capital recovery plus a 12% return for year 3, assuming declining balance depreciation.