A Piece of Equipment Cost $1,000 and Has a Salvage

question 54

Multiple Choice

A piece of equipment cost $1,000 and has a salvage value of $200.If it has an 8-year life,the annual depreciation expense under straight-line depreciation would be:

• A)$125.
• B)$100.
• C)$200.
• D)$800.

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Definitions:

Break-even

The point at which total cost and total revenue are equal, meaning there is no net loss or gain.

Profit-maximizing

A strategy or condition where a firm adjusts its production to achieve the highest possible profit based on its costs and the market price.

Shut-down Point

The price and quantity point at which a business ceases operations because continuing would result in losses.

Economically Efficient

A situation where resources are allocated in a way that maximizes the net benefit to society or minimizes the cost of achieving a set output level.