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Review Module 10 Engineering Economy Part 2

This document provides information about depreciation methods and calculations for engineering economy. It includes examples calculating depreciation using the straight-line, sum of years digits, declining balance, double declining balance, and sinking fund methods. It also includes examples calculating effects of inflation and performing a break-even analysis.

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Althea De Leon
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501 views1 page

Review Module 10 Engineering Economy Part 2

This document provides information about depreciation methods and calculations for engineering economy. It includes examples calculating depreciation using the straight-line, sum of years digits, declining balance, double declining balance, and sinking fund methods. It also includes examples calculating effects of inflation and performing a break-even analysis.

Uploaded by

Althea De Leon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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MANILA: Room 206, JPD Building, CM Recto Avenue, Manila

CEBU: 4/F J. Martinez Bldg., Osmeña Blvd., Cebu City


Telephone Number: (02) 516-7559 (Manila) E-Mail: buksmarquez1 @yahoo.com
(032) 254-9967 (Cebu)

Review MODULE – ENGINEERING ECONOMY

10.08 Depreciation using Straight-Line Method 10.12 Depreciation using Sinking-fund Method

1. A machine costing P480,000 has a life expectancy of 12 years with 5. A machine costing P480,000 has a life expectancy of 12 years with
a salvage value of 10% of the first cost. Using the Straight-Line a salvage value of 10% of the first cost. Using the Depreciation by
Method of Depreciation (SLM), what is the depreciation and book Sinking Fund Method (SFM), what is the depreciation and book
value of the machine after five years? value of the machine after five years? (assume interest rate= 8%)

10.09 Depreciation using Sum of the Years’ Digits Method 10.13 Inflation

2. A machine costing P480,000 has a life expectancy of 12 years with 6. An economy is experiencing inflation at the rate of 5% per year. An
a salvage value of 10% of the first cost. Using the Depreciation by item presently costs P200. If the 5% inflation rate continues, what
Sum of Years Digit Method (SOYD), what is the depreciation and will be the price of this item in 3 years.
book value of the machine after five years?

10.10 Depreciation using Declining Balance Method 10.14 Break-even Analysis

3. A machine costing P480,000 has a life expectancy of 12 years with 7. The cost of producing a certain commodity consists of P45.00 per
a salvage value of 10% of the first cost. Using the Depreciation by unit for labor and material cost and P15.00 per unit for other variable
Declining Balance Method (DBM), what is the depreciation and cost. The fixed cost per month amounts to P450,000. If the
book value of the machine after five years? commodity is sold at P250.00 each, what is the break-even
quantity?

10.11 Depreciation using Double Declining Balance Method

4. A machine costing P480,000 has a life expectancy of 12 years with


a salvage value of 10% of the first cost. Using the Depreciation by
Double Declining Balance Method (DDBM), what is the depreciation
and book value of the machine after five years?

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