Question

Lawrence purchased a used vehicle that depreciates under a straight-line method. The initial value of the car is $4500, and the salvage value is $500. If the car is expected to have a useful life of another 5 years, how much will it depreciate each year?

A. $1000
B. $5000
C. $500
D. $800

Answer 1

(4,500−500)÷5=800
............

Answer 2

Option D. $800

Explanation:

Lawrence purchased a used vehicle that depreciates under a straight-line method.

The initial value of the car = $4,500

Salvage value = $500

Depreciating value in 5 year = 4500 - 500 = $4,000

depreciating value in one year = 4,000 ÷ 5 = $800

It would depreciate $800 each year.

Answer : Option D. $800