Question

Mr. McDonald just bought a farm tractor for $50,000. For tax purposes, its value is expected to

depreciate at a rate of 16% annually. What will the tractor's value be in 4 years? Round to the
nearest hundredth (cent).

Answer 1

$24,893.40

Explanation:

Year 1

50,000 x 0.16 = 8,000

50,000-8,000 = 42,000

Year 2

42,000 x 0.16 = 6,720

42,000-6,720 = 35,280

Year 3

35,280 x 0.16 = 5644.80

35,280-5644.80= 29,635.2

Year 4

29,635.2x0.16 = 4,741.6

29,635-4,741.6 = $24,893.40