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Math Help - Depreciation

  1. #1
    Member GAdams's Avatar
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    Depreciation

    How would you work this out:

    A company bought a new truck. Each year the value of the truck depreciates by 20%. The value of the new truck can be mulitiplied by a number to find its value at the end of the four years. Find this number as a decimal.

    Thanks
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  2. #2
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    Quote Originally Posted by GAdams View Post
    How would you work this out:

    A company bought a new truck. Each year the value of the truck depreciates by 20%. The value of the new truck can be mulitiplied by a number to find its value at the end of the four years. Find this number as a decimal.

    Thanks
    Hello,

    the actual value of the truck can be calculated by:

    v(t) = v_0 \cdot (0.8)^t where v(t) is the value after t years and v_0 is the initial value (price for the new truck).

    Now plug in t = 4 and you'll get:

    v(4) = v_0 \cdot (0.8)^4 = 0.4096 \cdot v_0
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  3. #3
    Member GAdams's Avatar
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    Quote Originally Posted by earboth View Post
    Hello,

    the actual value of the truck can be calculated by:

    v(t) = v_0 \cdot (0.8)^t where v(t) is the value after t years and v_0 is the initial value (price for the new truck).

    Now plug in t = 4 and you'll get:

    v(4) = v_0 \cdot (0.8)^4 = 0.4096 \cdot v_0

    Where did the 0.8 come from?
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  4. #4
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    Quote Originally Posted by GAdams View Post
    Where did the 0.8 come from?
    Hello,

    if something decreases by 20% then you have 80% left and 80% as a decimal is 0.8
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