A Firm Is Considering Purchasing Two Assets

question 96

Multiple Choice

A firm is considering purchasing two assets.Asset L will have a useful life of 20 years and cost $5 million;it will have installation costs of $1 million but no salvage or residual value.Asset S will have a useful life of 8 years and cost $2 million;it will have installation costs of $500,000 and a salvage or residual value of $400,000.Which asset will have a greater annual straight-line depreciation?

• A)Asset L has $12,500 more in depreciation per year.
• B)Asset L has $37,500 more in depreciation per year.
• C)Asset S has $12,500 more in depreciation per year.
• D)Asset S has $37,500 more in depreciation per year.

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Definitions:

Fundamental Power Frequency

The primary frequency at which an electrical system is designed to operate, typically 50 or 60 Hz in most regions.

Harmonics

Oscillations at integer multiples of the fundamental frequency in an electrical signal, often considered unwanted distortions.

True-RMS Ammeter

An instrument that accurately measures the current in a circuit by calculating the root mean square of the waveform, suitable for both AC and non-sinusoidal conditions.

Harmonic Distortion

A distortion that occurs in a signal when there are frequencies in the output that are integer multiples of the fundamental frequency, affecting the signal's waveform.