Use the Following Information for Questions

question 68

Multiple Choice

Use the following information for questions:
Maddie Co.purchased a machine on January 1, 2011 for $22,500.The machine had an estimated useful life of 10 years and an estimated residual value of $2,500.The company uses double-declining-balance amortization.
-Assuming Maddie Co.uses straight-line amortization, what would be the book value of the machine on December 31, 2021?

• A)$ -0-
• B)$2,000
• C)$2,250
• D)$2,500

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Definitions:

Indexed Equity Mutual Fund

An equity mutual fund that holds a portfolio of stocks that matches their share (or weight) in a broad stock market index such as the S&P 500. The overhead of these funds is usually quite low because their expenses on stock trading and research are low.

Managed Equity Fund

An investment fund in which a manager or management team makes decisions about how to allocate assets in a portfolio of equities.

Operating Costs

Refers to the day-to-day expenses involved in running a business, such as rent, utilities, and payroll.

Random Walk Theory

The theory that current stock prices already reflect known information about the future. Therefore, the future movement of stock prices will be determined by surprise occurrences. This will cause them to change in a random fashion.