I’m trying to get my head around the following: in question 21 the ‘book value’ is mentioned 380, however initial cost of 500 minus depreciation (60*3=180) = 320 usd, but cfa states this should be 380. Perhaps I should include last years depreciation in the book value of the asset going forward? Its not clear to me! Thanks if someone could help out!
The depreciation is actually 40,000 not 60,000. Thus (40,000*3=120,000) and 500,000-120,000=380,000.
Perhaps you confused the 60,000 in cash flows with depreciation.