CFOS Unit3/Exercise 3.4 - Answers
Exercise 3.4 - Answer Sheet
If you prepare a table using the Simple Depreciation and Annualization methods, the annual depreciation or loss of value for the computer equipment would be as follows:
|Simple Depreciation Method||Annualization Method|
|Initial Capital Cost of PCs||2,400,000||2,400,000|
|Total Amount Depreciated||2,400,000||3,038,400|
Because you are comparing two possible alternative uses for this money, the most appropriate method to use in this situation is Annualization.