Josephine purchased a used vehicle that depreciates under a straight-linemethod. The initial value of the car is $5000, and the salvage value is $500. Ifthe car is expected to have a useful life of another 5 years, how much will itbe worth in 2 years?A. $3200B. $1000c. $900D. $4000​

Accepted Solution

Answer:D. $4000Step-by-step explanation:Initial value of the car is given $5000Salvage value given $500Useful life of car given is 5 yearsFormulaDepreciation for n years is given as:[tex]d_{n}= \textrm{Salvage value}\times \textrm{Number of years used}[/tex][tex]d_{n}=\textrm{Salvage Value}\times n[/tex]Plug in 2 for n. This gives,[tex]d_{2}=500\times 2=1000[/tex]∴ Depreciation after 2 years =$ 1000Value of car after 2 years = Initial value - Depreciation after 2 yearsValue of car after 2 years = [tex] 5000- 1000=4000[/tex]Therefore, value of car after 2 years = $ 4000