Car Depreciation Methods and Values

The video tutorial explains the depreciation of a car using the straight line and declining balance methods. It covers how to determine the purchase price, estimate the car's value after one year, and find when the car is worth $8,000 using both methods. The tutorial also discusses the intersection point where both depreciation methods yield the same book value and identifies the greatest difference in book values. The importance of understanding depreciation for tax benefits and car purchasing decisions is highlighted.

What is the initial purchase price of the car as indicated by the y-intercept?

• $10,000

• $12,000

• $15,000

• $18,000

After one year, what is the approximate value of the car using the declining balance method?

• $10,000

• $11,000

• $12,000

• $13,000

Using the straight line method, what is the car's value after one year?

• $13,000

• $12,200

• $12,000

• $11,000

At what point does the car's value reach $8,000 using the declining balance method?

• 1 year

• 2 years

• 2.5 years

• 3 years

How long does it take for the car to be worth $8,000 using the straight line method?

• 1 year

• 2 years

• 2.5 years

• 3 years

When do the book values of both depreciation methods become equal?

• 2 years

• 3 years

• 3 years and 8 months

• 4 years

What is the significance of the point before the intersection of the two depreciation methods?

• It indicates the highest car value.

• It shows the lowest car value.

• It marks the end of depreciation.

• It is important for tax benefits.

Why is the point before the intersection considered a good time to buy a car?

• The car is too old.

• It balances cost and quality.

• The car is brand new.

• It is the cheapest option.

What does the greatest difference in book values between the two methods represent?

• The smallest tax benefit.

• The largest tax benefit.

• The highest car value.

• The lowest car value.

Why might companies sell their cars at the point of greatest difference in book values?

• To maximize resale value.

• To minimize depreciation.

• To gain the most tax benefit.

• To avoid further depreciation.