Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 4

A new hybrid car was purchased by Pedernales Electric Cooperative as a courier vehicle to transport items between its 12 city offices. The car cost $30,000 and was retained for 5 years. Alternatively, it could have been retained for 100,000 miles. Salvage value is nil. Five-year DDB depreciation was applied. The car pool manager stated that he prefers UOP depreciation on vehicles because it writes off the first cost faster. Use the actual annual miles driven, listed below, to plot the book values for both methods. Determine which method would have removed the $30,000 faster. Show hand or spreadsheet solution, as instructed.