How do I calculate the depreciation value of a car?

1 Answer
May 26, 2015

The decline in cash value (depreciation) on a car can be calculated by the formula:

#V=C - (1 - r)^t#

where #V# is the value of the car after #t# years, #C# is the original cost and #r# is the depreciation rate.

Example if the initial cost of the car is $10,000, the depreciation rate is 25% and the present value of the car is $4,000, we can calculate how old the car is.

#4000=10000*(1-0.25)^t => 0,75^t = 0.4 => t*log0.75=log0.4 => t=log0.4/log0.7~~2.57 years#