If the reducing-balance method of depreciation is used, at a rate of 15 per cent per annum, what is the net book value of the excavator at the end of 3 years?

(a) £15,435

(b) £19,120

(c) £20,880

(d) £24,565

The following information applies to question.

JK Builders Co purchases a new excavator costing £40,000. Its expected useful life is 10 years, at which point it is anticipated that the excavator will have a residual value of £6,000.