Zeus Industries bought a computer for $2500. It is expected to depreciate at a rate of 20% per year. What will the value of the computer be in 2 years?
wrong
2500 * 0.8 = 2000
2000 * 0.8 = 1600
To find the value of the computer after 2 years, we need to calculate its depreciation for each year.
Year 1:
Depreciation = 20% of $2500
Depreciation = 0.20 * $2500
Depreciation = $500
Value after Year 1 = Purchase price - Depreciation
Value after Year 1 = $2500 - $500
Value after Year 1 = $2000
Year 2:
Depreciation = 20% of the value after Year 1
Depreciation = 0.20 * $2000
Depreciation = $400
Value after Year 2 = Value after Year 1 - Depreciation
Value after Year 2 = $2000 - $400
Value after Year 2 = $1600
Therefore, the value of the computer after 2 years will be $1600.
To find the value of the computer after 2 years of depreciation, we can use the formula for depreciation:
Value after depreciation = Initial value - (Depreciation rate * Initial value)
Given that the computer was bought for $2500 and is expected to depreciate at a rate of 20% per year, we can calculate the value after each year:
Year 1:
Depreciation amount = 20% * $2500 = $500
Value after 1st year = $2500 - $500 = $2000
Year 2:
Depreciation amount = 20% * $2000 = $400
Value after 2nd year = $2000 - $400 = $1600
Therefore, the value of the computer after 2 years of depreciation will be $1600.