Question

Zeller Industries bought a piece of weaving equipment for $60000. It is expected to depreciate at an average rate of 10% per yer.
1. Write an equation for the value of the piece of equipment after t years.
2. Find the Value of the piece of equipment after 6 years.
help and explain please

Answer 1

1) Let C = The cost of the equipment
Let t = Years
Let V = The value of the equipment

The equation then becomes:

C - (0.10) (C) (t) = V

2) $60,000 - (0.10) ($60,000) (6) = $60,000 - $36,000 = $24,000 Value

Since the depreciation is a constant of 10% per year, then what you need to do is to multiply the depreciation percent by the number of years that the equipment is depreciated. This gives you the accumulated depreciation. Then subtract this accumulated depreciation from the original cost of the equipment and you get the value of the equipment (this value is called the Book Value).