A Poultry Farmer Is Interested in Purchasing an Egg Tester

question 31

Multiple Choice

A poultry farmer is interested in purchasing an egg tester that can measure weight, albumin height, yolk color, and Haugh units all at the touch of a button. The unit will cost $6,900 and is expected to last 10 years at which point it can be sold for $500 to a farmer in a less stringently controlled egg market. What is the annual depreciation under the straight line method?

• A) $640
• B) $690
• C) $50
• D) $740

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Definitions:

Daily Payments

Payments made on a daily basis, often used in the context of loans or labor wages.

Loan

Money that is borrowed and should be returned with added interest.

Compounded Continuously

The process whereby interest is calculated on an initial principal and subsequently on the accumulated interest of previous periods, assuming the compounding occurs infinitely within a given time.

Effective Annual Rate

The actual interest rate an investment, loan, or savings account will yield after accounting for compounding.