Question

Daniel Potter bought a new car for $20,000.00. Two years later, he wanted to sell it. He was offered $14,650.00 for it. If he sold it for that amount, what was his depreciation rate?

Answer 1

Answer: 13.375% per year

Explanation:

1) Depreciation is the loss of value: $ 20,000.00 - $ 14,650.00 = $ 5,350

2) The percent of depreciation is amount of the depreciation divided by the value of the car when purchased, times 100.

That is (5,350 / $ 20,000) * 100 = 26.75 %

2) The rate is percent of depreciation per year:

depreciation rate = % of depreciation / number of years = 26.75%  / 2 = 13.375% per year.

Answer 2

First compute the different of the price like this:
 $20,000.00-$14,650.00=5350$
Then divide like this:
$\frac{5350.00}{20,000}=75$
Now compute the percentage like this:
$0,26\times100=26.75\%$
In order to compute the rate, divide by the number of years we get:
$\dfrac{26.75}{2}=13.37\%$
The rate of depreciation is $13.37\%$.