Linear Depreciation

Question

A small business buys a computer for $2700. After 4 years the value of the computer is expected to be $200. For accounting purposes, the business uses linear depreciation to assess the value of the computer at a given time. This means that if V is the value of the computer at time t, then a linear equation is used to relate V and t.

1) Find a linear equation that relates V (in dollars) and t (in yr).

2) Find the depreciated value of the computer 3 years from the date of purchase.

Answer 1

(0, 2700) and (4, 200) are two points on the line.

Slope = (200 - 2700) / (4 - 0) = --625

Equation is V - 2700 = -625( t - 0)

So, V = -625t + 2700

Replace t by 3 to determine the 3 year value.