9. A man bought a new trailer for $36,700. The insurance company decides to depreciate the trailer by 12.5% each year. Calculate the book value of the trailer at the end of 10 years.

Answer 1

Each year, the value of the trailer decreases by 12.5%, which is equivalent to multiplying the value by 0.875 (100% - 12.5% = 87.5%).

The book value of the trailer at the end of the first year is $36,700 * 0.875 = $<<36700*0.875=32012.50>>32,012.50.

Using the same formula, the book value at the end of the second year is $32,012.50 * 0.875 = $<<32012.50*0.875=28010.94>>28,010.94.

Continuing this calculation for 10 years, the book value at the end of the 10th year is:

$36,700 * (0.875)^10 = $10,804.32.

Therefore, the book value of the trailer at the end of 10 years is $10,804.32.