A Firm Is Considering Purchasing Two Assets

question 72

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 $300,000 and a salvage or residual value of $400,000.Asset B will have a useful life of 8 years and cost $3.5 million;it will have installation costs of $200,000 and a salvage or residual value of $800,000.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 $37,500 more in depreciation per year.
• C)Asset B has $30,000 more in depreciation per year.
• D)Asset B has $37,500 more in depreciation per year.