Depreciation
Maths: Edexcel A Level Pure Maths, topic 6.2.2
Depreciation
Depreciation can be thought of as when something gets reduces over time. This might be the value of a car or the volume of water in a bath.
Linear decay
- Linear decay is when something decreases by a steady amount over set time periods.
- E.g. pulling the plug out of a bath will reduce the volume of water in the bath by a set amount each second.
Exponential decay
- Exponential decay is when something decreases by a multiplier (or percentage) over set time periods.
Exponential decay example
- A car costs $10,000 when it's new. The value of a car reduces by 10% every two months.
- After two months, its value has decreased by 10%. It is now worth $10,000 × 0.9 = $9,000.
- After another two months, it is worth $9,000 × 0.9 = $8,100.
- After another two months, it is worth $8,100 × 0.9 = $7,290.
- After another two months, it is worth $7,290 × 0.9 = $6,561.
Test yourself on Depreciation
The amount of time I spend on my phone decreases by 10 minutes a day. I spend 2.5 hours on my phone on Monday. How long did I spend on my phone on Friday of the same week?
The value of a car reduces by 30% every 6 months. A car costs £15,000 when new. What is the value of the car after 2 years?