SOLUTION: Office furniture was bought for $1000 in the year 2002. By how much did its market value plummet in the year 2007, if the depreciation stood at 8% per annum?
Can you use the compo
Question 936174: Office furniture was bought for $1000 in the year 2002. By how much did its market value plummet in the year 2007, if the depreciation stood at 8% per annum?
Can you use the compound interest formula to work it out? Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website! it was bought for 1000 in 2002
2007 is 5 years later.
it depreciated 8% per year.
depreciation of 8% per year means it's remaining value at the end of each year is 100% - 8% = 92% of what it was the year before.
this is done 5 times.
the formula is 1000 * (.92)^5
solve to get remaining value at the end of the 5 years is equal to 659.08.
it starts at 1000
at the end of the the first year it's value is .92 * 1000 = 920
at the end of the second year it's value is .92 * 920 = 846.4
at the end of the third year it's value is .92 * 846.4 = 778.69
at the end of the fourth year it's value is .92 * 778.69 = 716.39
at the end of the fifth year it's value is .92 * 716.39 = 659.08
