An Asset Was Purchased for $250,000

question 21

Multiple Choice

An asset was purchased for $250,000.It had an estimated salvage value of $50,000 and an estimated useful life of 10 years.After five years of use, the estimated salvage value is revised to $40,000 but the estimated useful life is unchanged.Assuming straight-line depreciation, depreciation expense in year six would be

• A)$30,000.
• B)$22,000.
• C)$15,000.
• D)$21,000.

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Definitions:

Positively Correlated Stocks

Stocks whose prices tend to move in the same direction due to similar underlying factors or market conditions.

Volatility

A statistical measure of the dispersion of returns for a given security or market index, often associated with the degree of risk or uncertainty.

Systematic Risk

The risk inherent to the entire market or a whole market segment, which cannot be mitigated through diversification alone.

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The array of possible investment opportunities or combinations that are available to an investor.