Final answer:
To calculate the annual depreciation rate, multiply the monthly depreciation expense of $250 by 12 to find the annual depreciation expense, subtract the salvage value from the machine's cost, and apply the straight-line depreciation formula.
Step-by-step explanation:
The question involves calculating the annual depreciation rate using the straight-line depreciation method. To find the annual depreciation expense, we first need to multiply the monthly depreciation expense, which is $250, by 12 to get the yearly amount. Therefore, the annual depreciation expense is $250 x 12 = $3000. The original cost of the machine is $34000, and its salvage value at the end of its useful life is $4000. To determine the annual depreciation rate, we subtract the salvage value from the cost and divide the result by the useful life of the asset in years, represented by the total depreciation divided by the annual depreciation expense. The formula for the annual depreciation rate is (Cost - Salvage Value) / (Total Depreciation / Annual Depreciation Expense).
The annual depreciation rate can be calculated by first finding the total depreciation over the useful life of the machine. The useful life is the purchase price minus the salvage value, so in this case it is $34,000 - $4,000 = $30,000. Since the monthly depreciation expense is $250, the annual depreciation expense is $250 x 12 = $3,000. To find the annual depreciation rate, divide the annual depreciation expense by the useful life: $3,000 / $30,000 = 0.1, or 10%.