Question

a certain car was purchased for $14,900. the car has a resale value of $9,300 after a useful life of 8 years. what is the book value of this car after 2 years? annual depreciation expense = $700 book value = $? round to the nearest hundredth.

Explanation:

Step1: Recall the formula for book value

The book value of an asset after \( t \) years is given by the initial value minus the total depreciation over \( t \) years. The total depreciation over \( t \) years is the annual depreciation expense multiplied by \( t \). So the formula is: \( \text{Book Value} = \text{Initial Value} - (\text{Annual Depreciation} \times t) \)

Step2: Identify the given values

Initial value (\( V_0 \)) = $14,900, Annual depreciation (LXI1) = $700, Time (\( t \)) = 2 years

Step3: Calculate the total depreciation after 2 years

Total depreciation (\( D \)) = \( d \times t = 700 \times 2 = 1400 \)

Step4: Calculate the book value after 2 years

Book Value (\( V \)) = \( V_0 - D = 14900 - 1400 = 13500 \)

Answer:

\( \$13500.00 \)