CFA Practice Question

CFA Practice Question

An analyst has gathered the following information about a company:

Gross fixed assets: $34,568
Accumulated depreciation: $12,032
Depreciation expense: $2,317
Net income: $6,982
Tax rate: 34%

What are the relative and average ages of the fixed assets of the above company on the basis of straight-line assumption?
A. Relative age: 0.652; Average age: 9.71 years
B. Relative age: 0.652; Average age: 5.19 years
C. Relative age: 0.348; Average age: 5.19 years
Explanation: Relative age = 12,032 / 34,568 = 0.348
Average age = 12,032 / 2,317 = 5.19 years

User Contributed Comments 4

User Comment
grezavi Rel. Age = Avg. Age as a %age
threedot Relative age is how much of the asset is "used up"...
Merke Thx, threedot!
Oarona You explained it well threedot
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