Question

A new piece of equipment cost a company $15,000. Each year, for tax purposes, the company depreciates the value by 15%. What value should the company give the equipment after 5 years?

Short answer

The value should be $6655.58

Step-by-step solution

Given information

We are given $a_1=15000;a_n=r{a}_{n-1}$where $r=\frac{a_n}{a_{n-1}}$

Also $r=0.85$

Calculate

We have to calculate the value the company should give after 5 years that is $a_6$use the relation

localid="1647861079690" $$\begin{gathered} a_n=a{r}^{n-1} \\ {a}_6=a{r}^5 \\ {a}_6=15000{(0.85)}^5 \\ {a}_6=6655.58 \end{gathered}$$

Conclusion

The value should be $6655.58