Question

Louis Young paid $21,550 for a used car 5 years ago. Because he did not properly maintain the car, he sold it for only $4,850. What was his average annual depreciation?$3,054$3,340$3,570$3,740None of these choices are correct.

Answer 1

We will determine the annual average depreciation as follows:

*First: We determine the total depreciation:

`T=21550-4850\Rightarrow T=16700`

*Second: We divide the total depreciation by the number of years:

`A_d=(16700)/(5)\Rightarrow A_d=3340`

So, the average annual depreciation was of $3 340. [Option B]