What is the "straight line rate?" To obtain this, subtract the $600 residual value from the "new cost," $18,000. Result: $17,400.
The straight line rate would then be $17,400/5, or $3,480; twice that would be $6,960.
After one year, the book value at the end of year 1 would be $18,000-$6,960 = $11,040.
Follow a similar process to find the book value at the end of year 2. Twice the original depreciation at this point would be $6,960, as before. Subtracting this from $11,040 results in a book value at the end of year 2 of $11,040-$6,960= $4,080.
There may be other interpretations dictating what to do here. I'd suggest you look up "declining balance method" and compare it to what we have done here.
To calculate the percentage of increase, what we must do divide the two quantities, in this way we will be able to know how bigger they are from each other. So:
9000/6000 = 1.5
Now, we subtract those from 1, which would be 100%
