Question

A small business owner buys a truck for $20,000 to transport supplies for her business. She anticipates that she will use the truck for 5 years and that the truck will be worth $10,000 in 5 years. She plans to claim a depreciation tax credit using the straight-line depreciation method approved by the Internal Revenue Service. This means that if V is the value of the truck at time t, then a linear equation is used to relate V and t.

(a) Find a linear equation that models the depreciated value V of the truck t years since it was purchased.

(b) What is the rate of depreciation?

I've tried but I'm really stuck.

Answer 1

All you want is the linear equation passing through the two points
(0,20000) and (5,10000)
slope = (10000-20000)/(5-0) = -2000

So if we let t be the time

V = -2000t + 20000


the rate of depreciation is $2000/year