Question

Bj...

Suppose that you own a compact car

that you bought new for 18,000 dollars.

The value of this particular make of car is

known to depreciate at a rate of 20%

per year.

Define a unit for each quantity in the

worksheet. Then enter a variable for

the time since you bought the car new

Answer 1

Depreciation and Written Down Value for first 5 years of purchase is explained.

Explanation:

The Car was purchased for $18000 this will be depreciated at a rate of 20% per year.

Declining Method

Year 1

$18,000 * 20% = $3,600 Depreciation

$18,000 - $3,600 = $14,400 Written Down Value WDV

Year 2

$14,400 * 20% = $2,880 Depreciation

$14,400 - $2,880 = $11,520 WDV

Year 3

$11,520 * 20% = $2,304 Depreciation

$11,520 - $2,304 = $9,216 WDV

Year 4

$9,216 * 20% = $1,843 Depreciation

$9,216 - $1,843 = $7,373 WDV

Year 5

$7,373 * 20% = $1,475 Depreciation

$7,373 - $1,475 = 5,898 WDV