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A company replaces their cars every 6 years. A car is worth $13520 after 2 years. The company uses a depreciation rate of 35% a year.

a) How much will the car be worth when the company replaces it?
b) How much did the car cost when it was purchased?

  • Math -

    if the initial value is v,

    v - .35(2) = 13520

    Now, knowing v, after n years the car is worth

    v(1 - .35n)

    Note that the car is fully depreciated after only 3 years, if the depreciation is 35% of the full value each year.

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