Question

Jameson paid $13,500 for a used car 5 years ago. He sold it for only $3,200. What was the rate of depreciation to the nearest whole percent?

Answer 1

Explanation:

First we calculate the annual depreciation of the car

Annual Depreciation = (Cost of car – Net Scrap Value of car)/Useful Life

Details

Cost of Car= $13,500

Net scrap Value of car= $3,200

useful Life=5

Thus: Annual Depreciation = ($13,500-$3,200)/5

= $2,060/year (Annual Depreciation)

Rate = Annual Depreciation/Cost of car X 100%

= $2,060/$13,500 X 100%

Depreciation rate = 15%