Compound Interest & Depreciation (Leaving Cert Mathematics): Flashcards

Reduction in value of an asset over time

Cars and other motor vehicles

$V = P(1 - r)^t$

Value of the asset after $t$ years

Initial value (purchase price) of the asset

Depreciation rate (as a decimal)

Number of years

Asset loses value each year

$A = \frac{P-S}{t}$

Annual depreciation amount

Scrap value

Assets that lose value evenly (buildings, furniture)

Assets that lose more value in early years (vehicles)