Jeff 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?

Question

Jeff 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?​

Quizplus · Accepted Answer

The actual cash value of the TV can be calculated using the formula: actual cash value = replacement cost - depreciation. Depreciation can be calculated by dividing the total life expectancy by the number of years the TV was in use, and then multiplying the result by the original cost. In this case, depreciation = (9/3) x $900 = $2,700. Therefore, the actual cash value = $1,200 - $2,700 = -$1,500. However, the actual cash value cannot be negative, so it should be considered as $0. Therefore, the best choice is C, which is the closest to $0.

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