Final answer:
The straight-line depreciation for the car purchased by Company XYZ is $6,250 per year, calculated by subtracting the salvage value from the initial cost and dividing by the useful life.
Step-by-step explanation:
Calculating Straight-Line Depreciation
To calculate the straight-line depreciation of the car purchased by Company XYZ, we need to know the initial cost of the car, the salvage value at the end of its use, and the useful life of the asset. In this scenario, the initial cost is $30,000 and the salvage value after four years is $5,000. The useful life is given as four years.
The formula for straight-line depreciation is:
Annual Depreciation Expense = (Cost - Salvage Value) / Useful Life
So, for this car:
Annual Depreciation Expense = ($30,000 - $5,000) / 4 = $25,000 / 4 = $6,250 per year
Therefore, the car will depreciate by $6,250 each year over the four years.