Question

A company bought a new bus to transport it's employees to work at a price of $185,000 After 10 years the purchase price of the bus is $75,000. A.) At what rate has the price of the bus depreciated? B.) Write a linear equation for the book value of this bus at the end of t years where 0 less than or equal t less than or equal 10. C.) What will be the book value of this bus at the end of the 8th year? D.) when will this bus be worth $119,000?

Answer 1

A) Let t denote the time; and P denote the book value (or Price) .  

At t=0 , P = 185000. ; at t=10 , P = 75000.

Therefore, slope of the line : (185000 - 75000) / (-10) = -11000 $ per year <- this is the rate of price depreciation of the Bus

B) The linear equation is : P = (-11000)*t + 185000 $ ; 0 <= t <= 10;

C) Book value at t=8, P = (-11000)*8 + 185000 = 97000 $

D) We put P =119000 in the equation, to get t = 6 years.

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