An organization has purchased a large crane for a construction project expected to take 10 years to complete. The crane cost $250,000 to purchase and install. At the end of its life (10 years), it will have a scrap value of $50,000. Using straight-line depreciation, how much would you depreciate the crane, each year, if the expected long-term interest rate was 5 percent and the company used an IRR of 15 percent?

An organization has purchased a large crane for a construction project expected to take 10 years to complete. The crane cost $250,000 to purchase and install. At the end of its life (10 years), it will have a scrap value of $50,000. Using straight-line depreciation, how much would you depreciate the crane, each year, if the expected long-term interest rate was 5 percent and the company used an IRR of 15 percent?

An organization has purchased a large crane for a construction project expected to take 10 years to complete. The crane cost $250,000 to purchase and install. At the end of its life (10 years), it will have a scrap value of $50,000. Using straight-line depreciation, how much would you depreciate the crane, each year, if the expected long-term interest rate was 5 percent and the company used an IRR of 15 percent?




A. $25,000
B. $200,000
C. $27,500
D. $20,000


Answer: D


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