Two manufacturers produce the equipment required by a factory, at roug

Question

Two manufacturers produce the equipment required by a factory, at roughly equivalent prices of about $25,000. The life spans of the two possible acquisitions differ, however, as do the scrap value of the machines. Machine A depreciates $2,250 per year and has an expected life of 10 years. Machine B has a life span of 16 years and a scrap value of $3,000. Find the scrap value of machine A and the annual depreciation of machine B.

Bismuth83 · Answer

1. We are asked to  find the scrap value of machine A and the annual depreciation of machine B .

2. Let's review these 2 terms. The scrap value is how much the machine will cost after its expected life. The annual depreciation is how much money the machine uses up per year over its expected life. Knowing all of this, we have the formula:  StartingPrice - ExpectedLife * AnnualDepreciation = ScrapValue . The starting price for both machines is around $25000:  $25000 - ExpectedLife * AnnualDepreciation = ScrapValue .

3.  Scrap value of machine A.  Using the information from the text, we have:  $25000 - 10 * $2250 = ScrapValue \rightarrow ScrapValue =  $2500.

4.  Annual Depreciation of machine B.  Using the information from the text, we have:  $25000 - 16 * AnnualDepreciation = $3000 \rightarrow AnnualDepreciation = \frac{$22000}{16} =  $1375.

5. So, our answer is:   the scrap value of machine A = $2500 and the annual depreciation of machine B = $1375  .

Sameermg · Answer

Machine A: 
original price    $  25000-   $  2,250*10 =   $  2500
 Machine B: 
original price   $  25000-   $  3000 =   $  22000/16 =   $  1375
 Machine A=   $  2500
Machine B=   $  1375

egmat · Answer

Great question! This is a straightforward depreciation problem once you know the key formula:

Scrap Value = Purchase Price - (Annual Depreciation × Life Span)

Or equivalently:

Annual Depreciation = (Purchase Price - Scrap Value) / Life Span

Both machines cost about  $25,000 . Let's tackle each column.

Scrap Value of Machine A: 
We know Machine A depreciates  $2,250  per year and lasts  10  years.

Total depreciation over its life =  $2,250  ×  10  =  $22,500

Scrap Value =  $25,000  -  $22,500  =  $2,500

That matches  Row 5  ( $2,500 ) for the Scrap Value of Machine A column.

Annual Depreciation of Machine B: 
We know Machine B lasts  16  years and has a scrap value of  $3,000 .

Total depreciation over its life =  $25,000  -  $3,000  =  $22,000

Annual Depreciation =  $22,000  /  16  =  $1,375

That matches  Row 2  ( $1,375 ) for the Annual Depreciation of Machine B column.

Key Insight:  Notice that both machines use the exact same depreciation formula — the question just gives you different known values for each machine and asks you to solve for the missing piece.  For Machine A, you know the depreciation rate and solve for scrap value. For Machine B, you know the scrap value and solve for the depreciation rate. It's the same equation rearranged!

Answer: $2,500 for Scrap Value of A (Row 5), $1,375 for Annual Depreciation of B (Row 2)

Two manufacturers produce the equipment required by a factory, at roug

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Scrap value of machine A	Annual depreciation of machine B
		$1,250
		$1,375
		$1,500
		$2,250
		$2,500
		$2,750

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