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Tommy is able to depreciate the value of machinery as part of his income tax return. If he has a tractor valued at $50,000 that depreciates at a rate of 12% per year, what will be the tax value of his tractor in 5 years?

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oreoluwa2001ng

Answer:$26,386.60

Explanation: According to the question above, Tommy is able to depreciate his tractor valued at $50,000 with depreciation rate of 12% per year.

Cost is $50,000

depreciation rate is 12% per annum

First year= 50,000@12% = 50,000-6000= 44,000

Second year = 44,000@12% = 44,000-5280=38,720

Third year = 38,720 @ 12% = 38,720 - 4646.40 = 34,073.60

Forth year = 34,073.60 @ 12% = 34,073.60-4088.83 =29,984.77

Fifth year= 29,984.77 @12%= 29984.77 - 3,598.17=26,386.60

The value of the Tractor in five years is $26,386.60

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