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A business purchases $ 135, 000 of office furniture which depreciates at a constant rate of...

A business purchases $ 135, 000 of office furniture which depreciates at a constant rate of 11% each year. Find the residual value of the furniture 5 years after purchase. Show all the work.

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Answer #1

Depreciation for first year = $135,000 * 0.11 = $14,850

Book value at the end of first year = $135,000 - $14,850 = $120,150

Depreciation for second year = $120,150 * 0.11 = $13,216.50

Book value at the end of second year = $120,150 - $13,216.50 = $106,933.50

Depreciation for third year = $106,933.50 * 0.11 = $11,762.685

Book value at the end of third year = $106,933.50 - $11,762.685 = $95,170.815

Depreciation for fourth year = $95,170.815 * 0.11 = $10,468.79

Book value at the end of fourth year = $95,170.815 - $10,468.79 = $84,702.025

Depreciation for fifth year = $84,702.025 * 0.11 = $9,317.22

Book value at the end of fifth year = $84,702.025 - $9,317.22 = $75,384.80

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