Use the Information Below to Answer the Following Questions Depreciation Has Been Calculated on a Straightline Basis

question 33

Multiple Choice

Use the information below to answer the following questions.
Y3 Ltd is expanding its production of binoculars. The plant is expected to cost $750,000, have a life of 5 years, and a nil residual value. It will be ready for operation on 31 December 2017. The following statement of comprehensive income figures for the new binoculars are forecast: $\begin{array}{llllll}&2018 & 2019 & 2020 & 2021 & 2022 \\&\$ \mathrm{~m} & \$ \mathrm{~m} & \$ \mathrm{~m} & \$ \mathrm{~m} & \$ \mathrm{~m}\\\text { Sales } & 1.5 & 1.3 & 1.4 & 1.2 & 1.1 \\\text { Costs (including depreciation) } & 1.0 & 1.0 & 1.0 & 1.0 & 1.0 \\\hline \text { Profit before tax } & \underline{0.5} & 0.3 & 0.4 & 0.2 & 0.1\end{array}$ Depreciation has been calculated on a straightline basis. You should assume that all cash flows occur at the end of the year in which they arise. The company's cost of capital is 10%. Ignore taxation.
-Refer to the table above. The annual depreciation charge for the project is:

• A)$300,000.
• B)$250,000.
• C)$150,000.
• D)$200,000.

---

Definitions:

Intuitive Appeal

The instinctive desirability or attractiveness of an idea or concept because it seems naturally correct or facile.

Definitive List

An authoritative and final list of items that is regarded as complete and unalterable.

Emotional Intelligence

The ability to understand, use, and manage one's own emotions in positive ways to relieve stress, communicate effectively, empathize with others, overcome challenges, and defuse conflict.

Leadership Success

The effective achievement of desired outcomes and goals through the direction, influence, and guidance of others.