Depreciation

Items such as cars and electrical equipment lose value as time passes. This loss in value is called depreciation. Depreciation is usually given as a percentage of the value of the item at the beginning of the year.

Example:

A television costing #16000 depreciates by 25% in the first year and 20% in the second year. Find its value after two years.

Solution

1^st year: \( \frac{25}{100} \scriptsize \; \times \; 16000 \)

= #4000

Value = 16000 – 4000

=12000

2^nd year: \( \frac{20}{100} \scriptsize \; \times \; 16000 \)

= #2400

Value= 12000 – 2400

= #9600.