A Machine Costing $5000 Is Estimated to Have a Useful

question 21

Multiple Choice

A machine costing $5000 is estimated to have a useful lifetime of 5 years and a scrap value of $500.It is expected to run for 20,000 hours.You are given that the actual production hours in the first three years are: 5000 in year 1,4400 in year 2,and 4000 in year 3.What is the book value of this machine at the end of three years?

• A)$3015
• B)$1985
• C)$1650
• D)$1485

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Definitions:

Spot Prices

The current price in the marketplace at which a given asset, such as securities, commodities, or currencies, can be bought or sold for immediate delivery.

Cost of Carry

The cost associated with holding a financial position, including storage costs for commodities or interest costs for financial securities.

S&P 500 Index

An index comprising 500 of the largest companies listed on stock exchanges in the United States, serving as a barometer for the overall market's health.

Futures Contract

A standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future.