Jeff's apartment was broken into and his three-year-old TV was taken.Jeff had paid $900 for the TV,but it will cost $1,200 to replace the unit.What is the actual cash value of the TV assuming it has a life expectancy of nine years?
A)$1,200
B)$900
C)$600
D)$300

Question

Quizplus · Accepted Answer

The actual cash value of the TV can be calculated by taking into account its depreciation over time. Since the TV was three years old and had an initial cost of $900 with a life expectancy of nine years, its value depreciates by $100 each year ($900 / 9 years). After three years, it would have depreciated by $300 ($100/year * 3 years), leaving its actual cash value at $600 ($900 - $300).

Jeff's Apartment Was Broken into and His Three-Year-Old TV Was