Answer: $79,101.56
Explanation:
To calculate the value of the car in its fourth year after a depreciation of 25%, you can follow these steps:
1. Determine the depreciation amount in the third year:
Depreciation = Initial Value × Depreciation Rate
Depreciation = $140,625 × 0.25 = $35,156.25
2. Subtract the depreciation amount from the initial value to find the value at the end of the third year:
Value at the end of the third year = Initial Value - Depreciation
Value at the end of the third year = $140,625 - $35,156.25 = $105,468.75
3. Apply the 25% depreciation to the value at the end of the third year to find the value in the fourth year:
Depreciation in the fourth year = Value at the end of the third year × Depreciation Rate
Depreciation in the fourth year = $105,468.75 × 0.25 = $26,367.19
4. Subtract the fourth-year depreciation from the value at the end of the third year to find the value in the fourth year:
Value in the fourth year = Value at the end of the third year - Depreciation in the fourth year
Value in the fourth year = $105,468.75 - $26,367.19 = $79,101.56
Therefore, the car is worth approximately $79,101.56 in its fourth year after being depreciated by 25% based on its value of $140,625 in the third year.