Question

A computer that cost $2500 in 1990 depreciated at a rate of 30% per year. How much was the computer worth four years after it was purchased?

A. $20.25
B. $187.5
C. $600
D. $750

Answer 1

The computer was worth $600 four years after it was purchased.

Step-by-step explanation:

To calculate the value of the computer four years after it was purchased, we need to apply the depreciation rate of 30% per year.

First, calculate the amount of the original cost that remains after one year. If the computer costs $2500, 30% of $2500 is $750. Subtracting $750 from $2500 gives us $1750, which is the value of the computer after one year.

Repeat this process for each subsequent year. After two years, the computer will be worth 30% less than $1750, so it will be worth $1225. After three years, it will be worth 30% less than $1225, or $857.50. Finally, after four years, it will be worth 30% less than $857.50, which is $600.