BUSINESS, FUR1 2002 VCAA 6 MC

A machine is purchased for `$36\ 000`. Its value depreciates at a rate of `$0.16` for each unit it produces. On average, the machine produces `24\ 000` units a year.
Using the unit cost method of depreciation, the value of the machine after six years of use is closest to

A. $3840

B. $7200

C. $12 960

D. $23 040

E. $32 160

Show Answers Only

`C`

Show Worked Solution

`text(Depreciation per year)`	`= 24\ 000 xx 0.16`
	`= $3840`
`text(Value after depreciation)`	`= 36\ 000 − (3840)(6)`
	`= $12\ 960`

`:.\ text(After 6 years, value is $12 960.)`

`=> C`