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Plant Design and Economics for Chemical Engineers, 5/e
Max S. Peters, University of Colorado
Klaus Timmerhaus, University of Colorado, Boulder
Ronald E. West, University of Colorado, Boulder


FE Prep Quiz: Depreciation

Sample FE Exam Problems

How to use this section:This section includes questions and problems like those on a typical FE exam. It is recommended that you read through each question carefully.



1

A machine with a five-year life has a first cost of $20,000 and $2,000 salvage value. Its annual operating cost is $8,000 per year. According to the straight line method, the depreciation charge in year 2 is nearest to:
A)$3,600
B)$4,000
C)$11,600
D)$12,000
2

A depreciable asset with a three-year life has a first cost of $30,000 with a $6,000 salvage value. The machine's operating cost is $10,000 in year one, $12,000 in year two and $14,000 in year three. According to the straight line method, the depreciation charge in year 2 is closest to:
A)$8,000
B)$10,000
C)$20,000
D)$22,000
3

A machine with a 10-year life is to be depreciated by the MACRS method. The machine has a first cost of $30,000 with a $5,000 salvage value. Its annual operating cost is $7,000 per year. The depreciation charge in year three is nearest to:
A)$3.600
B)$4,320
C)$5,860
D)$7,120
4

A used machine, which had a initial cost of $70,000, was purchased by Company A for $50,000. The company expects to depreciate the machine over a five-year period and then sell it for $10,000. According to the straight line method, the depreciation charge in year two is nearest:
A)$8,000
B)$10,000
C)$12,000
D)$14,000
5

An asset with a first cost of $50,000 is to be depreciated by the straight-line method over a five year period. The asset will have annual operating costs of $20,000 and a salvage value of $10,000. According to the straight line method, the book value at the end of year 3 will be closest to:
A)$8,000
B)$20,000
C)$24,000
D)$26,000
6

An asset with a first cost of $50,000 is depreciated by the MACRS method over a five-year period. If the asset will have a $20,000 salvage value, its book value at the end of year two will be closest to:
A)$10,000
B)$16,000
C)$24,000
D)$30,000
7

An asset with a first cost of $50,000 is depreciated by the straight-line method over its five year life. Its annual operating cost is $20,000 and its salvage value is expected to be $10,000. The book value at the end of year five will be neares to:
A)zero
B)$8,000
C)$10,000
D)$14,000
8

An asset with a first cost of $30,000 has been depreciated by the straight line method at $4,000 per year. If the asset's depreciable life was five years, the salvage value used in calculating the depreciation was closest to:
A)$4,000
B)$5,000
C)$8,000
D)$10,000
9

An asset, which had a first cost of $50,000 and an estimated salvage value of $10,000, was depreciated by the MACRS method. If the depreciation charge in year two was $16,000, the recovery period of the asset was:
A)3 years
B)5 years
C)7 years
D)10 years
10

An asset, which had a first cost of $50,000 and an estimated salvage value of $10,000, was depreciated by the MACRS method. If its book value at the end of year three was $21,850 and its market value was $25,850, the amount of depreciation charged against the asset up to that time was closest to:
A)$18,850
B)$21,850
C)$25,850
D)$28,150