Depreciation market value

Insects and diseases caused by fungi and bacteria bring about widespread losses in banana culture by reducing production, depreciating market value of the fruit, and even destroying the industry. Thousands of tons of fungicides and hundreds of tons of insecticides are required yearly to control banana pests. New pesticides, better formulations, and improvement of existing pesticides are needed. Specific banana pests and the possibility of their control are discussed. 

Even when no violative residues are found, the carcasses usually depreciate in value a great deal while awaiting the test results. To reduce testing time, the producers may apply to an approved laboratory to have the samples analyzed at their own expense. In the event a violative residue is found, the producer has to submit another group of animals for residue evaluation. This procedure may be repeated until analysis data of tissue samples indicate a residue-free status. In the meantime, the livestock producer is often confronted with increased production costs due to overcrowding caused by inability to market the animals on a timely basis. In addition, weight gains are slowed, feed efficiency becomes poorer, and the value of the product is lowered because of accumulation of excessive finish. 

It is difficult to predict future market values or replacement values with a high degree of accuracy because of fluctuations in market demand and price conditions. On the other hand, a future book value can be predicted with absolute accuracy as long as a constant method for determining depreciation costs is used. It is quite possible for the market value, replacement value, and book value of a property to be widely different from one another because of unrealistic depreciation allowances or changes in economic and technological factors. 

The book value of an asset is the original cost paid minus the accumulated depreciation charged. The book value has no connection to the resale value or current market value of the asset ... 

Property, plant, and equipment. This is listed at book value, i.e., cost less accumulated depreciation. The actual market value of these assets may be considerably higher ... 

Exhibit 21.4 illustrates a generic TR swap. The protection buyer has contracted to pay the total return on a specified reference asset, while simultaneously receiving a LIBOR-based return from the protection seller. The reference or underlying asset can be a bank loan such as a corporate loan or a sovereign or corporate bond. The total return payments include the interest payments on the underlying loan as well as any appreciation in the market value of the asset. The protection seller will pay the LIBOR-based return it will also pay any difference if there is a depreciation in the price of the asset. The economic effect is as if this entity owned the underlying asset, as such TR swaps are synthetic loans or securities. 

All of the depreciation methods to be discussed are based on the asset book value, which at any year is defined as the original cost of the asset (e.g., the depreciable capital investment) minus the sum of the depreciation charges made to the asset up to that year. This is in contrast to the market value, which is the price that could be obtained for the asset if it were placed for sale in the open market, and the replacement value, which is the cost of replacing the asset. The book value is the value shown on the accounting records. The book value decreases each year until it reaches a salvage value, at which time it is completely depreciated. The number of years, n, over which an asset can be depreciated is usually related to an estimate of the useful life of the asset, which is discussed below. 

The cost of replacing property without a reduction for depreciation. By this method of value determination, damages for an insurance claim would be the amount needed to replace the property using new materials. Replacement cost refers to the amount that an entity would have to pay to replace an asset at the present time. This may not be the market value of the item. Replacement cost coverage is designed so the policyholder will not have to spend more money to get a similar new item and so that the insurance company does not pay for intangibles. May also be called replacement value. 

Not all assets are depreciated, though. Knowing this then begs the question, What assets are depreciated With the exception of land, those assets classified as PP E are depreciated. Land improvements, buildings, and equipment are depreciated however, land itself is not. Land does not have a useful life rather, it has an unlimited life, and in many cases, land becomes more useful as less land is available. Land tends to continue to produce revenue for a company. Note that depreciation is used to allocate cost it does not determine an assets value. Eventually, a fully depreciated asset may show a book value of zero dollars but its fair market value, what you could sell the asset for, may be much higher. 

The levelized prices of PV electricity and H2 are derived by net present value cash flow analysis. The net present value cash flow method is described in Appendix A.l. A straight tine, ten-year depreciation schedule is applied with an annual depreciation rate of 9% of capital. The levelized PV electricity and H2 prices are derived by choosing PV electricity and H2 prices to generate a revenue level that results in a cumulative, net cash flow stream with a 0 net present value over the thirty-year capital recovery period. The annual net cash flow streams are discounted at the present value of the 6%-discount rate. Investment funds are allocated in year 1 construction occurs in year 2 and H2 cash flow begins in year 3. The modular design of PV electrolysis plants and H2 distribution systems enables the rapid initiation of H2 marketing and cash flow. 

These figures are more conservative than those often quoted, and the residual values are higher. Experience indicates that used-up machinery ordinarily finds a market at second-hand prices considerably above those prevailing for junk material. Negative residual values are possible. The hfe of items like foundations is limited by that of the associated equipment. If A = amount to be realized to offset depreciation = initial cost—residual value, n = estimated life, r = rate of interest, S = annual depreciation charge, then... 

The reported expenditures don t correspond exactly to cash outlays because charges for indirect costs, overhead, or capital equipment and facilities may be made using allocation or depreciation methods that don t correspond in time to actual cash outlays. The term cash costs is used here to differentiate the reported expenditures from their present values in the year of market approval. 

Plant and equipment expenditures 50% of 10th year Sales, 2/3 spent evenly in 2 years prior to product launch. Remainder spent evenly over years 2 to 10 after product launch. 240/. of 5th year sales, spent evenly 4, 3, and 2 years prior to market launch, (investment depreciates over time and remaining book value is written off in the last year of analysis.) ... 

Related to these factors are several risks that the guarantor must take into account. One crucial consideration is the likelihood of the TR swap receiver defaulting at a time when the reference asset has declined in value. This risk is a function both of the financial health of the swap receiver and of the market volatility of the reference asset. A second important consideration is the probability of the reference asset obligor defaulting, triggering a default by the swap receiver before the swap payer receives the depreciation payment. 

Example 1. A company proposes to invest 500000 this year in a plant to make a speciality chemical on a scale of 500 tonnes/year. Working capital is estimated to be 100000 at full output and would be spent proportionally to output. Sales are forecast as 300 tonnes in year 1 rising to 400 tonnes and 500 tonnes in subsequent years. Product market life is expected to be five years before being replaced. A scrap value of 100000 is expected for the plant after shutdown. The variable cost of the product is 350/tonne and fixed costs are 155 000/year. Depreciation allowance and tax rate are 52% payable one year in arrears and sales income is 1100/tonne. The company needs a 15% return is the project viable What is the DCF rate ... 

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