Dog up! franks is looking at a new sausage system with an installed cost of $500,000. this cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $74,000.

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Mathematics

Brodie Krause

10 June, 19:22

Dog up! franks is looking at a new sausage system with an installed cost of $500,000. this cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $74,000.

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Eleanor Ellison · Answer 1

In this item, it is assumed that we are to calculate for the depreciation rate of the sausage system. This can be calculated through the equation,

D = (P - S) / n

where D is the depreciation rate,

P is the present value of the sausage system, $500,000

S is the salvage value, $74,000

and n is the number of years, 5 years

Substituting the known values from the given in this item,

D = ($500,000 - $74,000) / 5

D = $85,200

The depreciation rate of the new sausage system that Frank will buy is $85,200/year