Discussion Question 2 (Linear Depreciation)
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Discussion Question 2 (Linear Depreciation):
If you have a pair of ordered pairs of a linear function, you can find that linear function in the same way we did lines. Find the slope of the line using the two points and then put the slope and one point into the slope point formula.
An office building worth $1 million when completed in 2005 is being depreciated linearly over 50 years. What will be the book value of the building in 2010? (Assume scrap value is $0).
Let me get you started. Let's let x be the number of years after 2005 and y be the value of the building measured in millions of dollars. We can create two ordered pairs: at the beginning the time was x = 0 and the value is $1 million, which gives us (0, 1). At the end of 50 years the scrap value is $0, so that ordered pair is (50, 0).
Who can take it from there and find the slope, equation of the line through those points and the value of the building in 2010?
Answer: y = $0.9 million