Final answer:
To calculate the amount that a car depreciates each year, use the formula: (Cost - Salvage Value) / Useful Life. For example, if a car was purchased for $20,000, has a salvage value of $5,000, and a useful life of 5 years, the car would depreciate $3,000 each year.
Step-by-step explanation:
To calculate the amount that a car depreciates each year, you can use the straight-line depreciation method. The formula for straight-line depreciation is:
(Cost - Salvage Value) / Useful Life
Where:
- Cost is the original purchase price of the car
- Salvage Value is the estimated value of the car at the end of its useful life
- Useful Life is the number of years the car is expected to be used
For example, if a car was purchased for $20,000, has a salvage value of $5,000, and a useful life of 5 years, the calculation would be:
(20000 - 5000) / 5 = 3000
Therefore, the car would depreciate $3,000 each year.