Josephine purchased a used vehicle that depreciates under a straight-line
method. the initial value of the car is $5000, and the salvage value is $500. if
the car is expected to have a useful life of another 5 years, how much will it
be worth in 2 years?
a. $3200
b. $1000
c. $900
d. $4000

D. $4000

Step-by-step explanation:

Initial value of the car is given $5000

Salvage value given $500

Useful life of car given is 5 years

Formula

Depreciation for n years is given as:

Plug in 2 for n. This gives,

∴ Depreciation after 2 years =$ 1000

Value of car after 2 years = Initial value - Depreciation after 2 years

Value of car after 2 years =

Therefore, value of car after 2 years = $ 4000