Two assets, A and B, are purchased for the same price. Each loses 10% of its value in the first year. Subsequently, the value of A continues to decline in the same way by declining-balance depreciation, while the value of B continues to decline in the same way by straight-line depreciation. Which will have the greater book value in five years time?
A)A
B)B
C)Their book values will always be equal.
D)Their book values will generally be different, but they are exactly equal at the end of the fifth year.
E)It is impossible to say without knowing the MARR.

Question

Quizplus · Accepted Answer

The Answer of Two assets, A and B, are purchased for the same price. Each loses 10% of its value in the first year. Subsequently, the value of A continues to decline in the same way by declining-balance depreciation, while the value of B continues to decline in the same way by straight-line depreciation. Which will have the greater book value in five years time?
A)A
B)B
C)Their book values will always be equal.
D)Their book values will generally be different, but they are exactly equal at the end of the fifth year.
E)It is impossible to say without knowing the MARR.

Two Assets, a and B, Are Purchased for the Same