How to use this section: This section includes questions and problems like those on a typical FE exam. For organization purposes only, they are presented in chapter order of the text Engineering Economy, 6^th edition, by Blank and Tarquin.

It is recommended that you read through each question carefully.

1			A machine with a five-year life has a first cost of $20,000 and $2,000 salvage value. Its annual operating cost is $8,000 per year. According to the straight line method, the depreciation charge in year 2 is nearest to:
			A)	$3,600
			B)	$4,000
			C)	$11,600
			D)	$12,000
2			A depreciable asset with a three-year life has a first cost of $30,000 with a $6,000 salvage value. The machine's operating cost is $10,000 in year one, $12,000 in year two and $14,000 in year three. According to the straight line method, the depreciation charge in year 2 is closest to:
			A)	$8,000
			B)	$10,000
			C)	$20,000
			D)	$22,000
3			A machine with a 10-year life is to be depreciated by the MACRS method. The machine has a first cost of $30,000 with a $5,000 salvage value. Its annual operating cost is $7,000 per year. The depreciation charge in year three is nearest to:
			A)	$3,600
			B)	$4,320
			C)	$5,860
			D)	$7,120
4			A used machine, which had a initial cost of $70,000, was purchased by Company A for $50,000. The company expects to depreciate the machine over a five-year period and then sell it for $10,000. According to the straight line method, the depreciation charge in year two is nearest:
			A)	$8000
			B)	$10,000
			C)	$12,000
			D)	$14,000
5			An asset with a first cost of $50,000 is to be depreciated by the straight-line method over a five year period. The asset will have annual operating costs of $20,000 and a salvage value of $10,000. According to the straight line method, the book value at the end of year 3 will be closest to:
			A)	$8,000
			B)	$20,000
			C)	$24,000
			D)	$26,000
6			An asset with a first cost of $50,000 is depreciated by the MACRS method over a five-year period. If the asset will have a $20,000 salvage value, its book value at the end of year two will be closest to:
			A)	$10,000
			B)	$16,000
			C)	$24,000
			D)	$30,000
7			An asset with a first cost of $50,000 is depreciated by the straight-line method over its five year life. Its annual operating cost is $20,000 and its salvage value is expected to be $10,000. The book value at the end of year five will be neares to:
			A)	zero
			B)	$8,000
			C)	$10,000
			D)	$14,000
8			An asset with a first cost of $30,000 has been depreciated by the straight line method at $4,000 per year. If the asset's depreciable life was five years, the salvage value used in calculating the depreciation was closest to:
			A)	$4,000
			B)	$5,000
			C)	$8,000
			D)	$10,000
9			An asset, which had a first cost of $50,000 and an estimated salvage value of $10,000, was depreciated by the MACRS method. If the depreciation charge in year two was $16,000, the recovery period of the asset was:
			A)	3 years
			B)	5 years
			C)	7 years
			D)	10 years
10			An asset, which had a first cost of $50,000 and an estimated salvage value of $10,000, was depreciated by the MACRS method. If its book value at the end of year three was $21,850 and its market value was $25,850, the amount of depreciation charged against the asset up to that time was closest to:
			A)	$18,850
			B)	$21,850
			C)	$25,850
			D)	$28,150