SOLUTION: A farmer purchases a truck for $45,000 and plans to depreciate it using a straight-line depreciation over 9 years. Write a linear function that represents the value V of the truck

Question 270633: A farmer purchases a truck for $45,000 and plans to depreciate it using a straight-line depreciation over 9 years. Write a linear function that represents the value V of the truck as a function of its age, t.
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
he buys the truck for 45000 and depreciates it using straight line depreciation over 9 year.

45000 / 9 = 5000 per year.

his depreciation will be 5000 per year.

9 * 5000 = 45000 equals the original price of the truck.

the value of the truck is the amount of the original price of the truck that has not been depreciated.

V = 45000 - 5000*T where V = the remaining value of the truck and T = the age of the truck in years.

when the truck is new, its value is 45000 - 5000*0 = 45000

when the truck is fully depreciated in 9 years, its value is 45000 - 5000*9 = 45000 - 45000 = 0.

this is not the true value of the truck.

this is the book value based on the original cost minus the depreciated amount.

the truck has market value which is different from the book value.

that could be higher or lower than the book value depending on all kinds of stuff.

after 9 years, the truck has essentially been written off for depreciation purposes.

the depreciation each year is written off as an expense of the business.

after 9 years, the depreciation on the truck cannot be written off any further.

the truck is considered fully expensed after the 9 years.

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