Question

1.Seven years ago,Rocco's drum kit cost him R12500. It has now been valued at R2300.what rate of simple depreciation does this represent?

2.Fiona buys a DStv satellite dish for R3000.Due to weathering,its value depreciates simply at 15% p.a. After how long will the satellite dish have a book value of zero?

Answer 1

if it depreciates at r% per year, then

12500(1-r/100)^7 = 2300
r = 21.5%

the book value will never be zero. No matter how many times you multiply by 0.85 the answer is never zero. Presumably at some small fraction of residual value the book value is zero, but that has not been stated.

Answer 2

Thank u Steve