Question

Lenny's car is worth $18,000 after 5 years. When the car was new, it sold for $24,000. What is the depreciation rate?

Answer 1

If you doing straight-line depreciation rate

(P-s)÷N

(24000-18000)/5=1200

where p is cost, s is sold or salvage value, N is number of years

Answer 2

A=p (1-r)^t
18000=24000 (1-r)^5
Solve for r (rate of depreciation)
R=((18,000÷24,000)^(1÷5)−1)×100
R=−5.59 % per year