Question

You buy a car for $40,000. In your research you find out the car will be worth $0 after 12 years. Find the depreciation. What does this number tell you?

Answer 1

3333

This value of depreciation every year will get the car value to
`\$ 0 \ \textrm after\ 12 years`.

Explanation:

Given: Purchase value of car(b) =
`\$ 40000`

Time(x) = 12
`\textrm years`

Residual value(y) =
`\$ 0`

Depreciation value= m

We will use straight line depreciation method with negative slope to find depreciation value.

Y= -mx + b

⇒ 0 =
`-m * 12 + 40000`

We will subtract both side by 40000

⇒ -40000 =
`-12m`

Now, divide both side by -12

⇒ m =
`(-40000)/(-12) = 3333.33` ≅ 3333

∴ Depreciation value for every year will be
`\$ 3333`

This value of depreciation every year will get the car value to
`\$ 0 \ \textrm after\ 12 years`.