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Linear Depreciation Model?
A certain piece of machinery was bought 3 years ago by a company for $500,000. Its present resale value is $320,000. What will it be 4 yr from now, if we assume that the machine's resale value decreases linearly?
A) write the linear depreciation model
a) V(t)= 60t+500
b) V(t)=-60t+500
c) V(t)= -60t+320,000
d) V(t)= -60,000t-500,000
B) The machines resale value (rounded to the thousands place) 4 years from now is:
a) 260,000 if depreciated linearly
b) 80,000 if depreciated linearly
c) 113,000 if depreciated exponentially
d) 276,000 if depreciated exponentially
10 pts to best answers
3 Answers
- vingingeLv 710 years agoFavorite Answer
A)
Purchase Value = 500000
Current Value = 320000 after 3 years.
Annual Linear depreciation = (500000 - 320000) ÷ 3 = 180000 ÷ 3 = 60000 per annum
Linear Depreciation Model V(t) = 500000 - 60000t......where t is measured in years.
(I suspect that option d) should read, -60000t + 500000
B)
After a further 4 years t = 7.Then V(t) = 500000 - (7 x 60000) = 500000 - 420000 = 80000
Option b) provides a matching answer.
