Timothy paid $14,850 for a used car 4 years ago. Because he did not properly maintain the car, he sold it for $3,960. What was his average annual depreciation?

Depreciation rate = 16.32%

Step-by-step explanation:

First we calculate the annual depreciation of the car

Annual Depreciation = (Cost of car - Net Scrap Value of car) / Useful Life

Details

Cost of Car = $14850

Net scrap Value of car = $3,960

useful Life=4

Thus: Annual Depreciation = ($14850-$3,960) / 4

= $2,722/year (Annual Depreciation)

Rate = Annual Depreciation/Cost of car X 100%

= $2,722/$14,850 X 100%

Depreciation rate = 16.32%