Anna purchased a vehicle six years ago for $25,000.She recently sold it for $5,000.Over the years,she paid a total of $5,800 on auto insurance,$4,800 on gas and maintenance,and $2,500 in interest.What was her depreciation cost on this vehicle?

Question

Quizplus · Accepted Answer

Depreciation cost can be calculated by subtracting the selling price of the vehicle from its original purchase price and then subtracting any additional expenses incurred over the years. 
Depreciation cost = Purchase price - Selling price - Additional expenses 
= $25,000 - $5,000 - ($5,800 + $4,800 + $2,500) 
= $25,000 - $18,100 
= $6,900 
Therefore, the depreciation cost on this vehicle was $6,900, which is closest to option D ($20,000).

Anna Purchased a Vehicle Six Years Ago for $25,000