Question

A Dell computer depreciates in value by 25% each year after it is purchased. If you buy one this year for $800, how many years until the computer's value is $337.50?

Answer 1

`3` years.

Explanation:

Here initial value , `I=$800`; rate of depreciation , `R=25/100=0.25` and final vale `F=$337.5` and time in year `T=?`

We know formula for compounded depriciation as `F=I(1-R)^T or (1-R)^T=F/I` logging both sids we get `T log (1-R)= logF-logI or T= (logF-logI)/log(1-R) or T= (log 337.5 - log 800)/ log (1-0.25) or T= (log 337.5 - log 800)/ log 0.75 =3`years [Ans]