Inflation Increase in the amount of money needed to purchase same amount of goods or services. = results ina decrease in purchs f=5% Gan) HOTA 105 S = inflation rate iy, =_marker rate i, = real interest rate nan pee 1. Forice = Pprice(1 + J)" Bae Ces aae-8 Prrice = 300,000 n= 2010-1960 = 50 a+n a fi Fico = 2132,000 P= 100.000 i= 015 ae 0 #2006 2,132,000 = 300,000(1 +f) yy f=) P= 10,000( $72) 225,901.83 cbt t tAion decrease in the value of an asset due to usage or passage of time. Let FC = first cost SV. = salvage value d_~ depreciation charge (per year) n= economic life of the property in years m > any time before n BV, ~ book value afier m years Dp ~ total depreciation for m years Straight Line Depreciation Method OX FO=D, a timeStraight Depreciation Method 6. BV =FC=Dy Dm = am), Mode > stat - linear(y = A + Bx) Fe 20 yen 0 FC Fc=410000 m=10 n sv SV = 60,000 n=20 BVq = mJ m= BYnt 410,000 — 60,000 7 xO GV) 0 410,000 Dio = 17,500(10) = 175,000 20 60,000 BY =169 =(235,000) BV,q = 410,000 — 175,000 =(235,000 ‘Sinking Fund Method considering interest 5‘Sum of the Years Digit Method (SOYD) Ms 44 bh ds dy ds nom+1 Eyear’s digit dm = (FC SV) | ‘Sum of the Years Digit Method (SOYD) STRETEN stat -» exponential(y = A. B*) pas | 020] een oe 1200) yen ' 0 618,000 \ sv 8 30,900 BV = m9 — m= Bk k= 1 f30,900/618,000 = 0.3123 ds — BV, = 49 — 59 (43,1625.Service Output Method 11, BV, =FC-Dm Dm = 4(Qm) FC = 100000 SV = 10,000 Qn = 100(4) + 80(4) = 720 1s = 100(4) + 80(1) = 480 g = 100.000 = 10.000 ~ 720 Ds = 125(480) = 60,000 BV; = 100,000 — 60,000 125 PoE) Mode + stat + linear(y = A + Bx) ‘Modified Accelerated Cost Recovery System (MACRS) y " ‘Giass_| Typeal Assets [Bepr Methods eat | Sal ok, voces, ree, specaed mig 200% Deck. Bal Devices. aS ao = ec(?) (epr. ‘yea | Computes avs, ight Wuea,enal ave 20 Doc Bal ‘Censucton equipment research and an =P (1-Y erry) (2) 00%) For half-year convention with m < 10 Mert proper OE De a 106 Speialied heavy mig. Machinery, mobile 200% Ded 8a Fomes. TS ye boar, serie atonbutngs, adele | 160% Dea Ba Phone equipment Dear Sever oes, ow uy propery ndimprove. | TEOE Dok Bal mente [27 Sel Resena real estate propery Saighi Une se=1e()(t-Lerrrane) ‘iS pe Otis ad char non redenal real eae Sagi opeModified Accelerated Fost Recovery System (MACRS) a 12, @ FE ta 0G(2) (1D erate) FC = 10,000 n=7 m | L | pr=Fe(1-2) 1 > Fell ied % eds = 5 = 14.29% py, ( 4 iy : 2 ——} 2 | By = BY, (1-— dy = 5 (1 ~ 14.29%) = 24.49% i n %dy = za — 14.29% — 24.49%) = 17.49% | dm = B¥in-t ~ Bin dy = z (1 = 14.29% ~ 24.49% — 17.49%) = 12.49 dy = 12,49%(10,000) =(,249 = Da ecaton Rare nr Rac PT Fae [Seer | Teyer [Ate | 18a | Foyer ev [su Tass p 20.00 zoo] so] 3730] fo ;|ss] as] ss] sa) 2s] cs] [oleate 4 | 741 | ans sisz| 770] sa77| [2 |ozaad Toone [oras : ins s22|_6s| s7| [3 [eave [oars [oan . a7 7a7 [633] $205| [a [oazaa [ois |o.0s3 6 Se] S88 | S888] [5 Tocsss [ozzs1 Joon ° ess| sor] 44a] [6 [oossz a ess|_so0| aaex| [7 [oes ra 3a | sai | aasz 2 90] 446i 2 soi] 4aea * soo] ae Fe 15 son |_ 4.462 ae > sez 2 is ei F¢(1-) depr.rateper) (=