Number of years to make a worth of $45000 with Depreciation rate of 12% and Total worth $45000 is 4 years
Years= 4 year
What is Depreciation?
The term depreciation refers to an accounting method used to allocate the cost of a tangible or physical asset over its useful life. Depreciation represents how much of an asset's value has been used. It allows companies to earn revenue from the assets they own by paying for them over a certain period of time.
Given that:
limousine costs $75000
Depreciation rate = 12% per year= 0.12
Total worth= $45000
By using the formula for year we have
total worth = cost of object [tex](1- Depreciation \;rate)^{year}[/tex]
45000= 75000x [tex](1-0.12)^{year}[/tex]
0.6= [tex](0.88)^{year}[/tex]
Now taking log on both side we have
log 0.6= year x log0.88
-0.2218 = year x -0.05551
year= 4.049
year≈ 4 year(rounding off nearest year)
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