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 $408,000 worth of assets after t years, that depreciate at 18% 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 8 years?

Answer 1

The formula V(t) = Vo(b)^t
Vo is the value of assets 408000
b=1-r
R rate of depreciation 0.18
b=1−0.18=0.82
T time ( number of years )
So after 8 years the value of the assets is
V (8)=408,000×(0.82)^(8)=83,400.94
Round your answer to get 83401

Hope it helps!