UNIVERSITY OF SCIENCE AND TECHNOLOGY OF SOUTHERN PHILIPPINES

COLLEGE OF ENGINEERING

CIVIL ENGINEERING DEPARTMENT

ENGINEERING ECONOMY

Name: Johnmarc Prince G. Montano Date: December 6, 2022

Section: BSCE 2Q Plate No.: 1

1. The cost of a Dell Inspiron 15-700 Series laptop unit is P50,000 with a salvage value of P10,000 at the
end of its life of 5 years. Determine the book-value, total depreciation, and depreciation charge after 3
years. Consider an additional 5% of the initial cost for the accessories.

a. Using Straight Line Method 15pts

Given:

𝐿 = 5 𝑦𝑒𝑎𝑟𝑠
𝐶𝑂 = 𝑃50,000
𝐶𝐿 = 𝑃10,000
𝐶𝑂 − 𝐶𝐿
𝑑=
𝐿
𝐶𝑂 − 𝐶𝐿
𝐷𝑁 = 𝑛 [ ] = 𝑛(𝑑)
𝐿
𝐶𝑁 = 𝐶𝑂 − 𝐷𝑁

50,000−10,000
Depreciation Charge = 𝑑 = = 𝑃8,000
5
Total Depreciation (3 Years) = 𝐷3 = 3(8,000) = 𝑃24,000
Book Value = 𝐶3 = 50,000 − 24,000 = 𝑃26,000
b. Using Sinking Fund Method 15pts:

Given:

𝐿 = 5 𝑦𝑒𝑎𝑟𝑠
𝑖 = 5%
𝐶𝑂 = 𝑃50,000
𝐶𝐿 = 𝑃10,000
𝐶𝑂 − 𝐶𝐿
𝑑=
(1 + 𝑖)𝐿 − 1
𝑖
(1 + 𝑖)𝑛 − 1
𝐷𝑁 = 𝑑 [ ]
𝑖
𝐶𝑁 = 𝐶𝑂 − 𝐷𝑁

50,000−10,000
Depreciation Charge = 𝑑 = (1+0.05)5 −1
= 𝑃7,238.99
0.05
(1+0.05)3 −1
Total Depreciation (3 Years) = 𝐷3 = (7,238.99) [ ] = 22,820.92
0.05
Book Value = 𝐶3 = 50,000 − 22,820.92 = 𝑃27,179.08