Question

The cost of a television set is $6980. After three years it depreciates by 6% per annum. if you want to sell this television what is it's value?

Answer 1

Depreciation refers to the diminishing value of an item after a period of time due to a reduction in its original quality

Mathematically depreciation can be defined as

`\begin{gathered} D=P(1-R)^N \\ \text{Where} \\ D\text{ = Depreciation} \\ R\text{ = Rate of depreciation} \\ N\text{ = Period of depreciation} \\ P\text{ = Principal } \end{gathered}`

D = ?

R= 6/100 = 0.06

N = 3 years

P = $6,980

Substituting all these into the formula

`\begin{gathered} D\text{ = }6980(1-0.06)^3_{} \\ D=6980(0.94)^3 \\ D=\text{ 6980 }*\text{ 0.830584} \\ D=\text{ \$5797.47632} \\ D\approx\text{ \$5797.48} \end{gathered}`

Therefore, in 3 years the value of the television is approximately $5797.48