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

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Section 1.3 – Linear Depreciation; Cost, Revenue, Profit Functions 1Section 1.3 Linear Functions and Math Models Simple Depreciation If an asset depreciates linearly over t years, then the book value is: Irttf+-=)(where ris the rate of depreciation, tis time (in years), Iis the initial value. Example: If the book value formula is: 1005)(+-=ttf, 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: 90100)2(5)2(=-=fdollars. 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 (0t 10). c. Find the machine’s book value at the end of the 7thyear.

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