The value, V, of a piece of machinery depreciates at a rate which is proportional to V.
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Question:
The value, V, of a piece of machinery depreciates at a rate which is proportional to V. Two years after purchase, the machinery is worth $45 125, and four years after purchase, it is worth $40 725.
(a) If V = Ab where t is the number of years after purchase, find A and b, and explain the significance of the number A.
(b) By using your answer to part (a) or otherwise, express V in the form Ae where r is given to three significant figures.
(c) What is the difference between the depreciation model in questions a and b?
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