1. If an asset costs $15,000 and after 3 years the salvage value is $2,000, what is the book value at the end of year 2 using SOYD?
2. What does MACRS stand for?
3. A new motorcycle costs $4,000 and has a lifespan of 10 years. The salvage value is $500. Using Double Declining Balance, find the book value at year 8.
4. Using the same setup as question 8, find the book value at year 9.
5. An injection molder is purchased for $500,000 for a large scale commercial operation. Its expected life is production of 2 million plastic wheels. Its salvage value is $1,000. Using the units of production method, calculate the depreciation rate per unit. A 4 pack of plastic wheels yields a profit of $1.00. Is this enough to offset the depreciation of the machine? (Don't worry about other factors such as tax, operating costs, etc. - just depreciation).