An Airplane Costing $5 Million Is Expected to Be Flown

question 30

Multiple Choice

An airplane costing $5 million is expected to be flown 800,000 miles over its lifetime of 8 years,at which time it can be sold for $400,000.After 6 years,the total depreciation using the physical service method is $3.8 million.How many miles is the airplane flown in total over its last 2 years (years 7 and 8) ? (Answer to the nearest mile)

• A)128,000
• B)139,130
• C)192,000
• D)208,696

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Definitions:

Market Value

The price that a buyer pays to purchase shares of capital stock in the open market. Of course, for every buyer there is a seller.

Face Value

The nominal or dollar value printed on a security or instrument, such as a bond or currency note.

Contract Rate

The agreed-upon rate specified in a contract for performing services or supplying goods.

Bond Indenture

A contract that spells out the provisions of the contract between the corporation and bondholder.