Press Ctrl-A ©G Dear 2009 – Not to be sold/Free to use Depreciation Stage 5 - Year 10

2 Depreciation What is depreciation? It is the reduction in value of an item over time. A Subaru Tribeca Costs $58990 It depreciates by 20% annually for 4 years End of Slide

3 Depreciation – First Principles depreciated value$ %p.a.3 years What is the depreciated value of $ at 20% p.a. for 3 years? PrincipalYear 1 Principal Year 1 = $ Interest Year Interest Year 1 = 0.20 x $58 990= $ Principal Year 2 Principal Year 2 = $ $1 1798= $ Interest Year Interest Year 2 = 0.20 x $47192 = $ Principal Year 3 Principal Year 3 = $ $ = $ Interest Year Interest Year 3 = 0.20 x $ = $ Depreciated Value Depreciated Value = $ $ $ = $ Initial End of Slide

4 Compound Interest Formula Depreciated value $ %p.a.3 years What is the Depreciated value of $58990 at 20% p.a. for 3 years? P = $ n = 3 years r = 0.20 D = P(1 - r) n = ( ) 3 = x = $ End of Slide

5 Compound Interest Formula Depreciation amount What is the Depreciation amount of $ and depreciated value of $ over 3 years? Amount of Depreciation = $ $ = $ End of Show