Posted by Dave T on June 08, 2009 at 09:10:36:
In Reply to: RE Licence Textbook is WRONG, I'M RIGHT! posted by investorapprentice on June 07, 2009 at 08:34:23:
It appears that this is a math question that is ambiguously worded.
Under one interpretation, the annual depreciation is 5% and would be compounded each year for seven years which would give a result that is not in the answer set.
Under another interpretation, the depreciation "averaged" 5% for seven years and answer D is the correct solution.
You friend would be correct if he only considers the compounded depreciation interpretation. You are correct when you take the average depreciation path to a solution.
As far as the test is concerned, there is only one acceptable answer, but that does not mean either you or your friend are wrong. Just means the question is ambiguously worded.