Polaris Industries is forecasting its financial statements for Year 6. Selected financial information for Year 5 is provided in the table. In Year 6 Polaris Industries is planning to invest $50 million in CAPEX. The average depreciation rate is 12%. What is the forecasted depreciation expense in Year 6? Selected Financial Information
Polaris Industries Inc. ($000s)
$$\begin{array} { | c | c | }
\hline & \text { Year 5 } \
\hline \text { PP\&E } & 222,336 \
\hline \text { Depreciation } & 28,632 \
\hline \text { CAPEX } & 30,000 \
\hline
\end{array}$$

Question

Polaris Industries is forecasting its financial statements for Year 6. Selected financial information for Year 5 is provided in the table. In Year 6 Polaris Industries is planning to invest $50 million in CAPEX. The average depreciation rate is 12%. What is the forecasted depreciation expense in Year 6? Selected Financial Information
Polaris Industries Inc. ($000s)
$$\begin{array} { | c | c | } 
\hline & \text { Year 5 } \
\hline \text { PP\&E } & 222,336 \
\hline \text { Depreciation } & 28,632 \
\hline \text { CAPEX } & 30,000 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The forecasted depreciation expense for Year 6 is calculated by applying the average depreciation rate of 12% to the sum of Year 5's PP&E and the new CAPEX investment for Year 6. Thus, (222,336 + 50,000) * 12% = 32,680.

Polaris Industries Is Forecasting Its Financial Statements for Year 6