An asset owner has decided to purchase an item of equipment with a 15 year working life. Financial information with resp

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An asset owner has decided to purchase an item of equipment with
a 15 year working life.
Financial information with respect to this equipment is as
follows:
Purchase price: $15,000,000
Residual value: $ 2,500,000
i. Tabulate the depreciation and book value for the life of the
item by each of the following
methods:
• straight line
• declining balance
• sum of digits
(15 marks)
ii. Tabulate details of a sinking fund to accumulate to the
original purchase price less residual
value assuming an interest rate of 6.0% per annum.
(10 marks)
iii. Draw a graph showing the book values in each of the above
(plotted on the same graph for
comparison).
(10 marks)
iv. Discuss, in your own words, the circumstances in which you
would use a particular asset
depreciation method for this asset. You should discuss at least
three asset depreciation
methods. Use at least two (2) references to support your
answer.
(15 marks