Question

For accounting purposes, the value of assets (land, buildings, equipment) in a business are depreciated at a set rate per year. The value, V(t), of $384,000 worth of assets after t years, that depreciate at 16% per year, is given by the formula V(t) = Vo(b)t. What is the value of Vo and b, and when rounded to the nearest cent, what are the assets valued at after 7 years?

Answer 1

V(7)=384,000×1.16^(7)=1,085,268.37

Answer 2

Worth of assets after 7 years will be $113314.70

Explanation:

The value V(t) of asset after t years is given by the formula
`V_(t)=V_(0)(b)^(t)`

In the formula given V(t) = Worth of asset after t years

and
`V_(0)` is the initial value of the assets.

Since rate of depreciation of the assets is = 16% per year

So by the given formula

`(1-0.16)V_(0)=V_(0)(b)^(1)`

b = (1 - 0.16)

b = 0.84

Now we have to calculate the value of assets worth $384000 after 7 years.

By the given formula

`V_(t)=384000(0.84)^(7)`

= 384000(0.295)

= $113314.70

Therefore, worth of assets after 7 years will be $113314.70.