Question

Jim Clinnin purchased a used RV with 18,500 miles for $46,400. originally the RV sold for $67,500 with a residual value of $19,500. After subtracting the residual value, depreciation allowance per mile was $0.79. How much was Jim's purchase price over or below the book value?( input the amount as positive value.)​

Answer 1

Jim bought the used RV at a price of $ 6,485 under its book price.

Explanation:

Given that Jim Clinnin purchased a used RV with 18,500 miles for $ 46,400, and originally the RV sold for $ 67,500 with a residual value of $ 19,500 and, after subtracting the residual value, depreciation allowance per mile was $ 0.79, to determine how much was Jim's purchase price over or below the book value the following calculation must be performed:

18,500 x 0.79 = 14615

67,500 - 14,615 = X

52.885 = X

52,885 - 46,400 = 6,485

Therefore, Jim bought the used RV at a price of $ 6,485 under its book price.