Everything Maths Grade 11

6.3 CHAPTER 6. FINANCE

Example 1: Simple Decay method

QUESTION

A car is worth R240 000 now. If it depreciates at a rate of 15% p.a. on a straight-line depreci-
ation, what is it worth in5 years’ time?

SOLUTION

Step 1 : Determine what has been provided and what is required

P = R240 000

i = 0, 15

n = 5

A is required

Step 2 : Determine how to approach the problem

A = P(1− i× n)

A = 240 000(1− (0, 15 × 5))

Step 3 : Solve the problem

A = 240 000(1− 0 ,75)

= 240 000× 0 , 25

= 60 000

Step 4 : Write the final answer

In 5 years’ time the car is worth R60 000

Example 2: Simple Decay

QUESTION

A small business buys aphotocopier for R12 000. For the tax return the owner depreciates this
asset over 3 years usinga straight-line depreciation method. What amount will he fill in on