The number of years n for a piece of machinery to depreciate to a known salvage value

Question:

The number of years n for a piece of machinery to depreciate to a known can be found using the formula

log s – log i log(1 – d) п 3

where s is the salvage value of the machinery, i is its initial value, and d is the annual rate of depreciation.

(a) How many years will it take for a piece of machinery to decline in value from $90,000 to $10,000 if the annual rate of depreciation is 0.20 (20%)?

(b) How many years will it take for a piece of machinery to lose half of its value if the annual rate of depreciation is 15%?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...

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