To solve this problem, we'll follow these steps:

Step 1: Calculate the depreciated value of the cars after 7 years using the reducing-balance method.

The reducing-balance method for depreciation is calculated using the formula:

$V = P \times (1 - r)^t$

Where:

• $V$ is the value of the car fleet after $t$ years (depreciated value).
• $P$ is the initial cost of the car fleet ($500,000).
• $r$ is the depreciation rate (12% or 0.12).
• $t$ is the number of years (7 years).

Substituting the given values:

$V = 500,000 \times (1 - 0.12)^7$

$V = 500,000 \times (0.88)^7$

$V = 500,000 \times 0.5132$

$V = 256,600$

So, the depreciated value of the fleet after 7 years is $256,600.

Step 2: Calculate the total salvage value.

The total salvage value is 30% more than the combined depreciated value, so:

$\text{Salvage Value} = V \times (1 + 0.30)$

$\text{Salvage Value} = 256,600 \times 1.30$

$\text{Salvage Value} = 333,580$

Final Answer:

The company received $333,580 from the sale of the fleet.

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Would you like more details or have any questions about the process?

Here are some related questions to consider:

1. How does the reducing-balance depreciation method differ from the straight-line method?
2. What would the salvage value be if the depreciation rate were 15% instead of 12%?
3. How can you calculate the depreciation of an individual car if its initial value is known?
4. What would happen to the depreciation and salvage value if the company had kept the cars for 10 years instead of 7?
5. How can depreciation impact the financial statements of a company over time?

Tip: Always double-check the depreciation formula and make sure to apply the correct percentage each year.