SOLUTION: Determine the depreciation rate for a truck that was purchased for $125000 and the value after three years is $85000.

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Question 1174219: Determine the depreciation rate for a truck that was purchased for $125000 and the value after three years is $85000.
Answer by greenestamps(13203) About Me  (Show Source):
You can put this solution on YOUR website!


The value after 3 years is the initial value, multiplied by the depreciation factor 3 times.

85000+=+125000%28x%5E3%29

x%5E3+=+85000%2F125000+=+17%2F25+=+0.68
x+=+%280.68%29%5E%281%2F3%29

To several decimal places, that is 0.879366.

To check that, confirm that

125000%28.879366%5E3%29+=+85000

Note that that number is the depreciation factor; the depreciation rate that the problem asks for is 1-0.879366 = 0.120634, or about 12%.