Question

Dispensing unit decreased in value by 25% during the first year. If the dispensing unit was purchased for $28,000, what is the dispensing unit worth at the end of the 1st year?

(a) $21,000
(b) $25,000
(c) $26,000
(d) $29,000

Answer 1

To determine the value of the dispensing unit after a 25% depreciation, we calculate this percentage of the original cost ($28,000) and subtract it. Thus, the unit is worth $21,000 at the end of the first year.

Step-by-step explanation:

To find the value of the dispensing unit at the end of the first year after a 25% decrease in value, we will calculate 25% of the unit's original value and subtract it from the original price. The original value of the unit is $28,000.

25% of $28,000 is calculated by multiplying $28,000 by 0.25 (which is the decimal equivalent of 25%).

$28,000 × 0.25 = $7,000

We then subtract this value from the original price to find the new value:

$28,000 - $7,000 = $21,000

Therefore, the dispensing unit is worth $21,000 at the end of the first year.