A Firm Is Considering Purchasing Two Assets

question 13

Multiple Choice

A firm is considering purchasing two assets.Asset A will have a useful life of 12 years and cost $4 million; it will have installation costs of $600,000 but no salvage or residual value.Asset B will have a useful life of 8 years and cost $2.3 million; it will have installation costs of $220,000 and a salvage or residual value of $100,000.Which asset will have a greater annual straight-line depreciation?

• A)Asset A has $30,000 more in depreciation per year.
• B)Asset A has $80,833 more in depreciation per year.
• C)Asset B has $72,458 more in depreciation per year.
• D)Asset B has $108,622 more in depreciation per year.

---

Definitions:

Incentives to Produce

Factors or motivations that encourage firms or individuals to increase the production of goods or services.

Incentives to Work

Factors or conditions that motivate individuals to seek, accept, or engage in employment, including monetary and non-monetary rewards.

Income Inequality

The uneven distribution of income within a population, leading to gaps between the rich and the poor.

Redistribution of Income

A policy or process through which income is shifted from one segment of the population to another, often through taxation and welfare programs.