Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 13

Pneumatics Engineering purchased a machine that had a first cost of $40,000, an expected useful life of 8 years, a recovery period of 10 years, and a salvage value of $10,000. The operating cost of the machine is expected to be $15,000 per year. The inflation rate is 6% per year and the company's MARR is 11% per year. Determine
a) the depreciation charge for year 3, b) the present worth of the third-year depreciation charge in year 0, the time of asset purchase, and c) the book value for year 3 according to the straight line method.