Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 3

A robot used in simulated car crashes cost $70,000, has no salvage value, and has an expected capacity of tests not to exceed 10,000 according to the manufacturer. Volvo Motors decided to use the unit-of-production depreciation method because the number of test crashes per year in which the robot would be involved was not estimable. Determine the annual depreciation and book value for the first 3 years if the number of tests were 3810, 2720, and 5390 per year.