Annual Depreciation Rate

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 Essay regarding Annual Depreciation Charge

Task 9 Price Cash Runs

Due date: November 20, 2011 Instruction: Make sure you submit your assignment since an connection by night time on the due date

Solve most problems in the Excel file provided.

Trouble 1 . Regency Integrated Chips (RIC), a huge Nashville-based technology company can be evaluating a new project to manufacture a new chip. a. m. The project's estimated economical life is 5 years. RIC's marketing vice-president believes that annual revenue would be 35, 000 models if the units were priced at $3, 500 each. RIC expects simply no growth in unit product sales, and this believes which the unit price will surge by a couple of percent every year. c. The engineering section has reported that the job will require additional manufacturing space, and RIC currently posseses an option to obtain an existing building, at an expense of $10,50 million, which will would meet up with this need. The building would be bought and paid for upon December thirty-one, 2008, as well as for depreciation functions, it would fall into the MACRS 39- year class. The annual depreciation charge for the five many years of economic existence of the project would be: Season 1 1 . 3% Yr 2 2 . 6% Yr 3 installment payments on your 6% Season 4 installment payments on your 6% Yr 5 2 . 6%


The necessary equipment would be acquired and installed in late 2008, and it could also be covered on Dec 31, 2008. The equipment will fall into the MACRS 5-year class, and it would cost $5 mil, including vehicles and installation. The annual depreciation rate intended for the five years of economical life with the project will be: Year 12 months 2 Season 3 12 months 4 Yr 5







By the end of the project, the building is definitely expected to have got a market benefit of $5 million and the equipment is likely to have a market value of $1 million.


The production section has believed that variable manufacturing costs would be $2000 per product, and that set overhead costs, excluding depreciation can be $10 mil a year. They will expect varying costs to increase by a couple of percent annually, and fixed costs to...