1313_section1o3 - Section 1.3 Linear Functions and Math...

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Section 1.3 – Linear Depreciation; Cost, Revenue, Profit Functions 1 Section 1.3 Linear Functions and Math Models Simple Depreciation If an asset depreciates linearly over t years, then the book value is: I rt t f + - = ) ( where r is the rate of depreciation , t is time (in years), I is the initial value. Example: If the book value formula is: 100 5 ) ( + - = t t f , then the rate of depreciation is 5 (positive!!!) dollars per year, the initial value of the asset is 100 dollars, the value of the asset after 2 years is: 90 100 ) 2 ( 5 ) 2 ( = - = f dollars. Example 1: In 2000, the B&C Company installed a new machine in one of its factories at a cost of $250,000. The machine is depreciated linearly over 10 years with a scrap value of $10,000. a. Find the rate of depreciation for this machine. b. Find an expression for the machine’s book value in the t -th year of use (0 t 10). c. Find the machine’s book value at the end of the 7 th year.
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Section 1.3 – Linear Depreciation; Cost, Revenue, Profit Functions 2 Example 2:
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