A computer system bought by a business costs $3450.If the business can depreciate the computer by 50% the first year and then 40% of the remaining value the second year, how much is the computer worth at the end of two years?
Question
A computer system bought by a business costs $3450.If the business can depreciate the computer by 50% the first year and then 40% of the remaining value the second year, how much is the computer worth at the end of two years?
Solution
Step 1: Calculate the depreciation for the first year. The computer depreciates by 50% in the first year, so you multiply the initial cost by 50%.
1725
Step 2: Subtract the first year's depreciation from the initial cost to find the value of the computer after one year.
1725 = $1725
Step 3: Calculate the depreciation for the second year. The computer depreciates by 40% of its current value in the second year, so you multiply the current value by 40%.
690
Step 4: Subtract the second year's depreciation from the current value to find the value of the computer after two years.
690 = $1035
So, the computer is worth $1035 at the end of two years.
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