What is the actual cash value for a computer with a life expectancy of seven years that was purchased two years ago for $1,800 and would cost $2,300 to replace?
A)$1,800
B)$1,286
C)$1,643
D)$2,300

Question

Quizplus · Accepted Answer

The actual cash value can be calculated by first determining the depreciation per year, then subtracting the total depreciation over the past two years from the replacement cost. The computer depreciates $2,300 / 7 = $328.57 per year. Over two years, it depreciates $328.57 * 2 = $657.14. The actual cash value is $2,300 - $657.14 = $1,642.86, which rounds to $1,643, indicating a mistake in my explanation. The correct calculation should be: The depreciation per year is indeed $328.57, but the correct actual cash value should be calculated by considering the original purchase price or a more accurate depreciation method. Given the options and the mistake in calculation, the closest correct answer based on the provided method would actually be $1,643 if considering depreciation from the replacement cost, but without the exact method of calculation specified (straight-line from purchase or replacement cost, or another method), the precise answer can vary. My initial explanation led to an incorrect conclusion based on the options provided.

What Is the Actual Cash Value for a Computer with a Life