# math 213

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The effect of depreciation can be computed using a formula similar to the formula for compound interest.
a. Assume depreciation is the same each month. Write a problem involving depreciation and solve it.

b. Develop a general formula for depreciation defining what each variable in the formula stands for.

• math 213 -

This is not straight line depreciation but a constant percentage depreciation per month.

let value after a month be d times value the month before. (like 0.97 or something)

Then value after n months = original value * d^n

for example if I buy a \$500 appliance
and d = .97 per month
then after 2 years
value = 500(.97)^24
= 500(.481)
= \$ 241

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