For accounting purposes, the value of assets (land, buildings, equipment) in a business depreciates at a set rate per year. The value, V(t), of $775,000 worth of assets after t years, which depreciate at 15% per year, is given by the formula V(t) = V0(b)^t. What is the value of V0 and b, and when rounded to the nearest cent, what is the value of the assets after 6 years?
Hint: b = 1 − r for depreciation
For accounting purposes, the value of assets (land, buildings, equipment) in a business depreciates at a set rate per year. The value, V(t), of $775,000 worth of assets after t years, which depreciate at 15% per year, is given by the formula V(t) = V0(b)^t. What is the value of V0 and b, and when rounded to the nearest cent, what is the value of the assets after 6 years?
Hint: b = 1 − r for depreciation
V(t) = V0(b)^t
V(t)=$775,000*.85^6
V(t)=$292,290.87 its value after 6 years of depreciation @ 15% per year.
b=1 - 15%=.85=85%
