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20 April, 17:35

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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  1. 20 April, 18:55
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    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
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