What is the true economic depreciation

Assignment Help Econometrics

Reference no: EM131431344

It is difficult to ascertain precisely the decline in the value of most assets as they grow older. An exception is automobiles. Assume that a new car costs $5000; that its value at the end of one year is $4000, at the end of two years $3000, at the end of three years $2000; and that it loses $250 in value for each of the following eight years. What is the true economic depreciation? What is the present discounted value of this, assuming a 5 percent after-tax interest rate? What will be the depreciation allowances under the current system? What is the present discounted value of these depreciation allowances? (Cars are treated as five-year assets.)

Reference no: EM131431344

Questions Cloud

Compare and contrast this madness with don quixotes : Hamlet is very much a play that focuses in the interior struggles of one individual: Hamlet, but how are Hamlet's struggles representative of the greater struggles Demark faces, and subsequently, the ones England faces at this time?

Is the concentration of ultrafine particles dangerous : Is there any evidence to suggest that the mean level of ultrafine particles in a 24-hour period in Kansas City is over the EPA standard of 35 μg/m3?

Consider what your study suggests about the cultures : Compare the Tang Empress Wu Zetian (also known as Empress Wu or as Wu Zhao; ruled China around 690-705 AD) with either the Pharaoh Cleopatra (ruled Egypt around 51-31 BC) or the Pharaoh Hatshepsut (ruled Egypt around 1478-1458 BC). You may also pr..

What do you think it implies about the design of tax policy : Do you think this is true? If it is, what do you think it implies about the design of tax policy?

What is the true economic depreciation : What is the present discounted value of these depreciation allowances? (Cars are treated as five-year assets.)

What is probability of newborn weighing at least 384 pounds : if, indeed, the mean weight for new born elephant calves is 225 pounds with a standard deviation of 45 pounds, what is the probability of a newborn weighing at least 384 pounds?

What is the most expensive promotion tool : In most cases, what is the most expensive promotion tool? Which of the following is an advantage of using newspapers as an advertising medium

Discussion by building on others : To be considered substantive, your reply should add significantly to the discussion by building on others' comments, pointing out similarities or differences in your backgrounds or course expectations, etc. One or two sentence responses such as "H..

What type of blood does patient one have : What type of blood does patient 1 have? List ALL blood types that can be given to a patient with the type of blood that patient 1 has. List ALL blood types that can be given to a patient with the type of blood that patient 2 has.

User Account

All Pages