You buy a new computer for $2100. The computer decreases in value 10% annually. When will the computer have a value of $600?

Question

I'm in algebra, and I'm having trouble with this question. Any help please? This is urgent, I've got a test tomorrow, and we're reviewing tonight.

Answer 1

Hi May J

In your class if you are using future value or declining value calculations this may be useful

FV = PV(1- r/100)^t

Where in your case

FV=600

PV = 2100

r = 10%

t = time in years

600 = 2100(1-0.1)^t

600/2100 = (0.9)^t

0.2857 = (0.9)^t

You will need logs beyond this point to solve for t

log₁₀(0.2857) = tlog₁₀(0.9)

log₁₀(0.2857)/log₁₀(0.9) = t

11.8907 years = t

I used 4 decimal places and a future value calculation I hope you find this useful. There are other ways to calculate deprication.

I’ll round off to two places and check below

FV = PV(1-r/100)^t

2100(0.9)^11.89= 600.02