Question

garland mills purchased a certain piece of macinery 3 years ago for $500,000. Its present resale value is $320,000. Assuming that the macine's resale value decreases exponentially, what will it be 4 years from now

Answer 1

New value= $80,000

Step-by-step explanation:

Giving the following information:

Purchase price= $500,000

Current value= $320,000

First, we need to calculate the annual decrease in value:

Total decrease 3 years= 500,000 - 320,000= 180,000

Annual decrease= 180,000/3 = $60,000

Now, the value of the machine 4 years from now:

New value= 320,000 - (60,000*4)

New value= $80,000