Question

Jim Clinnin purchased a used RV with 19,000 miles for $46,000. Originally the RV sold for $70,000 with a residual value of $20,000. After subtracting the residual value, depreciation allowance per mile was $.86. How much was Jim's purchase price over or below the book value?

Answer 1

First, let's find the total amount the RV depreciated: $70,000 (original price) - $20,000 (residual value) = $<<70000-20000=50000>>50,000
Next, let's find the total amount the RV was allowed to depreciate: 19,000 miles * $0.86 per mile = $<<19000*0.86=16340>>16,340
Now let's find the book value of the RV at the time of purchase: $70,000 (original price) - $16,340 (depreciation) = $<<70000-16340=53660>>53,660
Finally, let's find the difference between Jim's purchase price and the book value: $46,000 (purchase price) - $53,660 (book value) = $-<<46000-53660=-7660>>7,660. So Jim's purchase price was $7,660 below the book value. Answer: \boxed{-7660}.