Depreciation (1 Viewer)

[Evertonian]

I cant solve this >,< An accountant purchased a computer for 6000. The value of the computer depreciates by 33% p.a. When the value of the computer falls below 1000, it is written off and a new one is purchased. How many years will it take for the computer to be written off. i just cant do it....

 

[toby12]

are you asked to use the straight line or declining balance formula?

 

[terminator69]

Declining balance.

$6000(1-0.33)^5

Trial and error and i got 5.

 

[PC]

S = V₀(1 – r)ⁿ
We need S = 1000, V₀ = 6000 and r = 33% = 0.33

S = V₀(1 – r)ⁿ
1000 = 6000(0.67)ⁿ
Divide both sides by 6000
1/6 = (0.67)ⁿ

Now a number of ways of going from here.
1. Guess and check (or trial and error)
2. Use logs
3. Use solver function on graphics calc

Let's use guess and check.

When n = 3: (0.67)³ = 0.300763
When n = 4: (0.67)⁴ = 0.201511
When n = 5: (0.67)⁵ = 0.135013

.: The computer will be written off in the 5th year.