Question

Investment in a crane is expected to produce profit from its rental of $15,000 the first year it is in service. The profit is expected to decrease by $2,500 each year thereafter. Calculate the expected profit in the second year.

Answer 1

The expected profit from the crane rental in the second year is calculated by subtracting the yearly decrease of $2,500 from the first year's profit of $15,000, resulting in $12,500.

Step-by-step explanation:

To calculate the expected profit in the second year from the rental of a crane, we need to consider that the profit decreases each subsequent year. Given that the investment in a crane is expected to produce profit of $15,000 in the first year and decreases by $2,500 each year thereafter, we simply subtract $2,500 from the first year's profit to find the second year's expected profit.

First Year Profit: $15,000
Decrease in Profit: $2,500

Second Year Profit = First Year Profit - Decrease in Profit
Second Year Profit = $15,000 - $2,500
Second Year Profit = $12,500