Question

A printer purchased for K6000, depreciates at a flat rate of 15% per year. It will be replaced when its value falls below K1000. Find:
1. The amount the printer depreciates each year.
2. The useful life of the printer.

Answer 1

1. The amount the printer depreciates each year can be calculated as follows:
Year 1: K6000 * 15% = K900
Year 2: (K6000 - K900) * 15% = K810
Year 3: (K5100 - K810) * 15% = K729
Year 4: (K4290 - K729) * 15% = K656.10
Year 5: (K3560.10 - K656.10) * 15% = K590.49

Therefore, the printer depreciates by K900 each year.

2. The useful life of the printer can be determined by calculating the number of years it takes for its value to fall below K1000. Based on the depreciation rate of 15% per year, we can calculate:
K6000 - 5 * K900 = K1000

Therefore, the useful life of the printer is 5 years.

Answer 2

The answer for 2. is 6 years

Answer 3

Apologies for the error in my previous response. Let's recalculate the useful life of the printer:

K6000 - 6 * K900 = K6000 - K5400 = K600

Since the printer will be replaced when its value falls below K1000, we can see that after 6 years, the value of the printer will be K600 which is below the replacement threshold.

Therefore, the correct useful life of the printer is 6 years. Thank you for bringing this to my attention.