1. ## Calculating Depreciation

The original value of machine X is V dollars, while the original value of machine Y is 2V dollars. Both machines depreciate in value at a constant rate of 10 percent of their original value per year.

How to find:
The value of machine X after 3 years
The value of machine Y after 6 years  Reply With Quote

2. What I tried to do is:
Let V = 100

X = 100
Y = 200

But finding the value of X and Y after a couple of years gets nasty:

So would you all just do the calculation or is there a faster way?  Reply With Quote

3. Imo
V(1-10/100)^3
2v(1-10/100)^6  Reply With Quote

4. IMO it's :-

v (1-3*10/100)
&
2v (1-6*10/100)

because, it's been given in the qn stem that "Both machines depreciate in value at a constant rate of 10 percent of their original value per year."  Reply With Quote

5. Thanks for the feedback, I will study this.

The only answer is that Machine Y after 6 years > Machine X after 3 years  Reply With Quote

6. Once again Krovvidy you are right and I am duh!   Reply With Quote

7. Kroviddy, let me ask you a question.

For equation 1:

V = 100
Using a calculator = 72.9

So does your equation serve to get me to a very close value or is it suppose to be exact?

I am sure you are right, I am just trying to understand for myself.  Reply With Quote

8. No approximation ... I think, you should get 70 ... it's an exact value ...

I derived it like this:

v - v*10/100 ---> after 1st year
v - v*10/100 - v*10/100 ---> after 2nd year
v - v*10/100 - v*10/100 - v*10/100 ---> after 3rd year
i.e., v(1-3*10/100) ...

HTH  Reply With Quote

9. i dont know the actual formula for the depreciation value.but i think mick, go on with your way.plugging numbers could be one of the best way for the problem.72.9 was mine ans too.

krov and dynamo, is this a formula for depreciation?  Reply With Quote

10. @skawal, If you understand the concept here, probably you don't need to memorize a formula ...

It's understood that every year some percent of the initial amount would be lost in depreciation ... we need to see how much would be the depreciated amount after 3 or 6 years ... in my second explanation above you can see the way it's derived ...

If let's say the qn stem was as follows:
The original value of machine X is V dollars, while the original value of machine Y is 2V dollars. Both machines depreciate in value at a rate of 10 percent of per year.

In such case, it would be the compound interest formula (with a -ve interest rate) ... then Dynamo's solution would've been correct ...

HTH ...  Reply With Quote