Plethora Farms purchased a greenhouse for 52700 Delivery cos

Plethora Farms purchased a greenhouse for $52,700. Delivery costs totaled $1,825 and handling costs were $3,000. The useful life is 10 years and the salvage value is $14,050. Using the straight-line depreciation method, calculate the book value at the end of year 4.

Solution

total cost = 52,700

delivery cost = 1,825

handling cost = 3,000

so

Exact cost of house = 52,700 - 1825 - 3000 = 47875

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we know that price at t=0 is 47875

and after t=10 is 14,050

so

we have (0,47875) and (10, 14050) two points

so eqation pass through these points is

y = (-6765/2) t + 47875

so after t=4

y = $34,345