Question

The value of a bike depreciates by 55% per year. Work out the current value of a bike bought 2 years ago for £1300.

Answer 1

Year 1: 1,300 * 55% = 715  depreciation
             1,300 - 715 = 585  book value

Year 2: 585 * 55% = 321.75 depreciation
             585 - 321.75 = 263.25 book value

Year 3: 263.25 * 55% = 144.79 depreciation
             263.25 - 144.79 = 118.46 book value

If the bike was bought 2 years ago, then its current value is $263.25. 

Currently, it is the beginning of Year 3 but depreciation is computed at the end of the year.