Straight-line DepreciationBook value is the value of an asset that a company uses to create its balance sheet.Some companies depreciate their assets using straight-line depreciation so that thevalue of the asset declines by a fixed amount each year. The amount of the declinedepends on the useful life that the company assigns to the asset. Suppose that acompany just purchased a fleet of new cars for its sales force at a cost of $31,500 percar. The company chooses to depreciate each vehicle using the straight-line methodover 7 years. This means that each car will depreciate by +31,500 7 = +4500 per year.(a) Write a linear function that expresses the book value V of each car as a functionof its age, x.(b) Graph the linear function.(c) What is the book value of each car after 3 years?(d) Interpret the slope.(e) When will the book value of each car be $9000?[Hint: Solve the equation V1x2 = 9000.]
Straight-line Depreciation
Book value is the value of an asset that a company uses to create its balance sheet.
Some companies depreciate their assets using straight-line depreciation so that the
value of the asset declines by a fixed amount each year. The amount of the decline
depends on the useful life that the company assigns to the asset. Suppose that a
company just purchased a fleet of new cars for its sales force at a cost of $31,500 per
car. The company chooses to depreciate each vehicle using the straight-line method
over 7 years. This means that each car will depreciate by +31,500
7 = +4500 per year.
(a) Write a linear function that expresses the book value V of each car as a function
of its age, x.
(b) Graph the linear function.
(c) What is the book value of each car after 3 years?
(d) Interpret the slope.
(e) When will the book value of each car be $9000?
[Hint: Solve the equation V1x2 = 9000.]
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