A graphic designer purchases a computer system valued at $45 000.
The salvage value of the system after a number of years can be calculated using either of the two methods of depreciation shown in the table.
\begin{array} {|l|l|} \hline \rule{0pt}{2.5ex} \text{Method of depreciation} \rule[-1ex]{0pt}{0pt} & \text{Rate of depreciation} \\ \hline \rule{0pt}{2.5ex} \text{Straight-line method} \rule[-1ex]{0pt}{0pt} & \text{\$4000 per annum} \\ \hline \rule{0pt}{2.5ex} \text{Declining balance method} \rule[-1ex]{0pt}{0pt} & \text{10% per annum} \\ \hline \end{array}
Under which method of depreciation would the salvage value of the equipment be lower at the end of 4 years? Justify your answer with appropriate mathematical calculations. (3 marks)
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