A new building that costs $1,400,000 has a useful life of 10 years and a scrap value of $100,000. Using straight-line depreciation, find the equation for the value V in terms of t, where t is in years. (Make sure you use t and not x in your answer.)

Question

Reynaldo Zamora

Business

7 June, 11:51

A new building that costs $1,400,000 has a useful life of 10 years and a scrap value of $100,000. Using straight-line depreciation, find the equation for the value V in terms of t, where t is in years. (Make sure you use t and not x in your answer.)

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Answers (1)

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Josephine Strong · Answer 1

V = $1,400,000 - $130,000t

Explanation:

Data provided in the question:

Cost of the new building = $1,400,000

Useful life = 10 years

Scrap value = $100,000

Now,

using the straight line method

Annual depreciation = [ Cost - Scrap value ] : Useful life

= [$1,400,000 - $100,000 ] : 10

= $130,000

Value of building = Cost of the building - Depreciation for 10 years

V = $1,400,000 - [ Annual depreciation * Time ]

V = $1,400,000 - $130,000t