Canliss Mining Uses the Replacement Method to Determine Depreciation on Its

question 49

Multiple Choice

Canliss Mining uses the replacement method to determine depreciation on its office equipment. During 2007, its first year of operations, office equipment was purchased at a cost of $14,000. Useful life of the equipment averages 4 years and no salvage value is anticipated. In 2009, equipment costing $5,000 was sold for $600 and replaced with new equipment costing $6,000. Canliss would record 2009 depreciation of:

• A)$3,500.
• B)$4,400.
• C)$5,400.
• D)None of these.Cost of replacement equipment of $6,000 less proceeds of $600 = $5,400.

Understand the relationship between investment horizon, bond duration, and realized rate of return.

Grasp the concept of convexity and its implications for bond price changes.

Differentiate between various bond investment strategies to manage interest rate risk.

Calculate and interpret the duration of various bonds and investment strategies.