Mathematics for Business GS 1129

Week 4 and 5 Tutorial

Depreciation
1. A new car costs $25,000. Each year the car depreciates by 9% of its
value at the start of the year. What will the car worth at the end of 4
years?

2. Jack owns the Deli café. He buys an espresso machine for $800.00.
Each year the expresso machine depreciates by 4% of its value at the
start of the year. What will it worth at the end of 10 years?

3. Garry has a restaurant in town. He bought a freezer for $ 1,888.00

Each year the freezer depreciates by 5% of its value at the start of the
year. What will the freezer worth at the end of 8 years?

4. Jini has a body shop for automobiles. He bought a spray-painting

machine for $10,500.00, and it has a useful life of 5 years. Its scrap
value is $800. Calculate the depreciated values over the 5 years using
the double-declining balance method.

5. From question 4, if Jini decided to buy two of these spray-painting

machines. Calculate the total depreciated values and the total values
over the 5 years for these two machines using the double-declining
balance method.

6. The new computer equipment at Leisure Travel has a cost of

$ 14, 500. It has an estimated life of 8 years, and a scrap value of
$ 2100. Find (a) the annual depreciation and (b) the book value at the
end of 4 years using the straight-line method of depreciation.

7. If a company owned ten of the similar computer equipment as in

question 6, find (a) the total annual depreciation and (b) the total book
values at the end of 4 years for these ten computers using the straight-
line method of depreciation.

Politeknik Brunei , General Studies Department, Mathematics

8. Jessica bought some white boards for her reading clinic at a cost of
$ 3,620 per unit. The estimated life of a white board is 5 years, with
scarp value of $ 400. If Jessica owned three of these white boards, use
the double-declining-balance method of depreciation to find (a) the
annual rate of depreciation, (b) the total amount of depreciation in the
first year, (c) the total accumulated depreciation at the end of the third
year, and (d) the total book value at the end of the third year for these
three whiteboards.

Answer:
1. $17143.74
2. $531.87
3. $1,252.54

4. Year 1 4,200 6,300

Year 2 2,520 3,780
Year 3 1,512 2,268
Year 4 907.2 1,360.8
Year 5 544.32 816.48

5. Year 1 8,400 12,600

Year 2 5,040 7,560
Year 3 3,024 4,536
Year 4 1,814.4 2,721.6
Year 5 1,088.64 1,632.96

6. (a) $ 1,550 ; (b) $ 8, 300

7. (a) $ 15,550 ; (b) $ 83, 000
8. (a) 0.4 / 40 %
(b) $4,344
(c)
Year Depreciation Book Value
1 6516
2 2606.4 3909.6
3 1563.84 2345.76
Accumulated
depreciation
= $ 8514.24

(d) $ 2345.76

Politeknik Brunei , General Studies Department, Mathematics