Acct1101 Exam Final Sample Essay
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School of Business
SAMPLE EXAMINATION
ACCT1101 Account for Decis Making
This paper is for St Lucia Campus students.
For Examiner Use Only
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Question 3
James Wilson, process engineer, had been given the task of redesigning an existing process to improve environmental performance. He knew that the acceptance of a more environmentally efficient process would depend on its economic feasibility. The process design required new equipment and an infusion of working capital.
The equipment would cost $450,000 and its cash operating expenses would total $90,000 per year. The equipment would last for seven years but would need a major overhaul costing $45,000 at the end of the fifth year. At the end of 7 years, the equipment could be sold for $30,000. The annual depreciation for this equipment using the straight