SOLUTION: A vehicle is leased for 24 months. It has a residual value of 65% of its original price after this time. What is the depreciation rate for this vehicle?
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Question 984336: A vehicle is leased for 24 months. It has a residual value of 65% of its original price after this time. What is the depreciation rate for this vehicle? Answer by Boreal(15235) (Show Source):
You can put this solution on YOUR website! P=Po{1+r}^n
0.65=(1+r)^2
ln of both sides. I will round but don't on calculator.
-.43=2 ln (1+r)
-.215=ln (1+r)
raise both to e power
0.806=1+r
r= -0.194 or 19.4% per year.
