Depreciation, SMB-003 MC

A new car costs $30 000 and is depreciated using the reducing balance method by 20% of its value each year.

After three years its value is

`$6000`
`$12\ 000`
`$15\ 360`
`$24\ 000`

Show Answers Only

`C`

Show Worked Solution

`V_0= 30\ 000,\ \ \ r = 20% = 0.2,\ \ \ n = 3`

`S`	`= V_0 (1-r)^n`
	`= 30\ 000 (1-0.2)^3`
	`=30\ 000 xx 0.8^3`
	`= $15\ 360`

`=> C`