A brand new car that is originally valued at $25,000 depreciates by 8% per year. What is the value of the car after 6 years?
The Book Value depreciates 8% per year. We set up a depreciation equation:
BV(t) = BV(0) * (1 - 0.08)^t
The Book Value at time 0 BV(0) = 25,000. We want the book value at time 6.
BV(6) = 25,000 * (1 - 0.08)^6
BV(6) = 25,000 * 0.92^6
BV(6) = 25,000 * 0.606355
BV(6) = 15,158.88
The Book Value depreciates 8% per year. We set up a depreciation equation:
BV(t) = BV(0) * (1 - 0.08)^t
The Book Value at time 0 BV(0) = 25,000. We want the book value at time 6.
BV(6) = 25,000 * (1 - 0.08)^6
BV(6) = 25,000 * 0.92^6
BV(6) = 25,000 * 0.606355
BV(6) = 15,158.88