If a $5000 piece of equipment depreciates at a rate of 5% per year, how much will it be worth after 5 years?
is it $3,868.9?
V = Vo - Vo*r*t = 5000 - 5000*0.05*5 =
5000 - 1250 = $3750 = Value after 5 yrs.
....
3570
To calculate the value of the equipment after 5 years, you need to apply the formula for calculating compound interest:
Value = Principal × (1 - Rate) ^ Time
In this case, the principal (initial value) of the equipment is $5000, the rate is 5% (or 0.05 as a decimal), and the time is 5 years.
Plugging in the values into the formula:
Value = $5000 × (1 - 0.05) ^ 5
Value = $5000 × (0.95) ^ 5
Value = $5000 × 0.77
Value = $3850
Therefore, the equipment will be worth $3850, not $3,868.9, after 5 years of depreciation.