A new computer costs $5,000 and is expected to save $500 per month in employee time because of its speed. It has an expected life of 3 years. Using straight-line depreciation, how much is the computer worth at the beginning of the second year?

Question

Quizplus · Accepted Answer

The computer depreciates $5,000 / 3 years = $1,666.66 per year. At the beginning of the second year, it has depreciated by $1,666.66, so its value is $5,000 - $1,666.66 = $3,333.34.

A New Computer Costs $5,000 and Is Expected to Save