# Solution: Determine the length of service life necessary of the new equipment

ABC Corporation makes it a policy that for any new equipment purchased, the annual depreciation cost should not exceed 20% of the first cost at any time with no salvage value.

#### Problem Statement: ECE Board November 1998

ABC Corporation makes it a policy that for any new equipment purchased, the annual depreciation cost should not exceed 20% of the first cost at any time with no salvage value. Determine the length of service life necessary if the depreciation used is the SYD method.

• A. 7 years
• B. 8 years
• C. 9 years
• D. 10 years

The length of service life necessary is 9 years.

Solution:

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