Straight-Line Depreciation If you purchase an item for business use, in preparing your income tax you may be able to spread out its expense over the life of the item. This is called depreciation. One method of depreciation is straight-line depreciation, in which the annual depreciation is computed by dividing the cost of the item, less its estimated salvage value, by its useful life. Suppose the cost is C dollars, the useful life is N years, and there is no salvage value. Then the value V (in dollars) of the item at the end of n years is given by
If new office furniture is purchased for $3200, has a useful life of 8 years, and has no salvage value, after how many years will it have a value of $2000?
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