a machine with a 5 year tax depreciation recovery period has

a machine with a 5 year tax depreciation recovery period has a first cost of 100000$ with no salvage value. its annual operating cost is $6000 per year

(a) calculate the pw of total depreciation using the straight line method

Solution

a) The Present Worth (PW) of total depreciation using the straight line method:-

   = (Cost of assets - Residual value) / Useful life of asset

   = (100000 - 0) / 5

   = 100000 / 5

= $ 20000

Note:- Residual value/ Salvage value of machine given in the question is NIL.

Conclusion:- The Present Worth (PW) of total depreciation in a year using the straight line method = $ 20000