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.

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Definitions:

Trochlear Nerve

The fourth cranial nerve, responsible for controlling the superior oblique muscle of the eye, which allows for rotational movement.

Eyeball

The spherical part of the eye that contains the structures responsible for vision, including the lens, retina, and cornea.

Cranial Nerve

One of twelve nerves that originate directly from the brain, not the spinal cord, and regulate various functions of the head and neck.

Parotid Area

The region around the parotid gland, the largest of the salivary glands, located near the ear and responsible for saliva production.