How many years of useful life should be estimated

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Reference no: EM131061592

A reactor of special design is the major item of equipment in a small chemical plant. The initial cost of the completely installed reactor is $60,000, and the salvage value at the end of the useful life is estimated to be $10,000. Excluding depreciation costs for the reactor, the total annual expenses for the plant are $100,000. How many years of useful life should be estimated for the reactor if 12 percent of the total annual expenses for the plant are due to the cost for reactor depreciation? The straight-line method for determining depreciation should be used.

Reference no: EM131061592

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