Gr 11 Math Ch 9: Simple and Compound Depresiation

What is the formula for calculating the book value of an asset using simple depreciation?

$A = P(1 - i)$

$A = P(1 - in)$ (correct)

$A = P(1 + in)$

$A = P(1 + i)^n$

What is a key characteristic of compound depreciation?

The book value increases exponentially over time.

The depreciation amount remains the same every year.

The depreciation amount changes each year, decreasing as the asset's value decreases. (correct)

The asset's value becomes zero at the end of its useful life.

How do you find the annual depreciation rate (i) for simple decay?

Rearrange the formula to solve for i. (correct)

Use the formula A = P(1 + in) to find i.

Rearrange the formula to solve for A.

Rearrange the formula to solve for P.

What is the relationship between the initial value, final value, and depreciation rate in simple decay?

Linear Signup and view all the answers

What is the formula for calculating the total depreciation for simple depreciation?

P × i × n Signup and view all the answers

What happens to the book value of an asset over time using compound depreciation?

It follows an exponential decay pattern. Signup and view all the answers

What is a key difference between simple and compound depreciation?

Simple depreciation calculates depreciation on the initial principal amount, while compound depreciation calculates depreciation on the remaining value of the asset. Signup and view all the answers

Why can't the book value of an asset ever reach zero using compound depreciation?

Because the formula A = P(1 - i)^n ensures that the book value never reaches zero. Signup and view all the answers

What is the primary difference between simple and compound depreciation?

Simple depreciation calculates depreciation on the initial principal amount, while compound depreciation calculates it on the remaining value of the asset. Signup and view all the answers

If an asset has a principal amount of $10,000 and a depreciation rate of 10%, what is its book value after 2 years using simple depreciation?

$7,200 Signup and view all the answers

What is the total depreciation of an asset with a principal amount of $8,000, a depreciation rate of 15%, and a time period of 5 years using simple depreciation?

$6,750 Signup and view all the answers

Which of the following statements is true about compound depreciation?

The depreciation amount decreases each year. Signup and view all the answers

If an asset has a principal amount of $12,000 and a depreciation rate of 12%, what is its book value after 3 years using compound depreciation?

$8,448 Signup and view all the answers

What is the purpose of finding the annual depreciation rate (i) in depreciation calculations?

To determine the depreciation rate required to achieve a specific book value. Signup and view all the answers

Which of the following is a characteristic of simple depreciation?

The total depreciation can be calculated as P × i × n. Signup and view all the answers

What is the result of rearranging the simple depreciation formula to solve for i?

A linear equation. Signup and view all the answers

If an asset has a principal amount of $15,000 and a depreciation rate of 8%, what is its book value after 4 years using simple depreciation?

$9,600 Signup and view all the answers

What is the total depreciation of an asset with a principal amount of $18,000, a depreciation rate of 12%, and a time period of 6 years using compound depreciation?

$7,344 Signup and view all the answers

An asset has a principal amount of $20,000 and a depreciation rate of 10%. If the book value after 5 years is $12,832, what type of depreciation is being used?

Compound depreciation Signup and view all the answers

What is the relationship between the initial value, final value, and depreciation rate in compound decay?

Exponential Signup and view all the answers

An asset has a principal amount of $25,000 and a depreciation rate of 15%. If the book value after 3 years is $17,421.88, what is the total depreciation?

$7,578.12 Signup and view all the answers

What is the depreciation rate of an asset with a principal amount of $30,000, a book value of $21,952.38 after 4 years, and a depreciation method of compound decay?

12% Signup and view all the answers

An asset has a principal amount of $22,000 and a depreciation rate of 18%. If the book value after 2 years is $15,808.64, what is the depreciation amount for the second year?

$3,116.16 Signup and view all the answers

What is the book value of an asset with a principal amount of $28,000, a depreciation rate of 12%, and a time period of 5 years using simple depreciation?

$16,896 Signup and view all the answers