Question

A piece of manufacturing equipment valued at $125000 depreciates at a steady rate of 10% per year. What is the value of the equipment in 15 years?

Answer 1

Answer:

The value of the equipment in 15 years will be $25,736

Step-by-step explanation:

The value of the equipment after t years is given by the following equation:

$V(t) = V(0)(1-r)^{t}$

In which V(0) is the initial value and r is the yearly depreciation rate, as a decimal.

A piece of manufacturing equipment valued at $125000 depreciates at a steady rate of 10% per year.

This means that $V(0) = 125000, r = 0.1$

Then

$V(t) = V(0)(1-r)^{t}$

$V(t) = 125000(1-0.1)^{t}$

$V(t) = 125000(0.9)^{t}$

What is the value of the equipment in 15 years?

This is V(15).

$V(15) = 125000(0.9)^{15} = 25736$

The value of the equipment in 15 years will be $25,736