Business Equipment Is Often Depreciated Using the Double Declining-Balance Method $n = \frac { \log V - \log C } { \log \left( 1 - \frac { 2 } { N } \right) }$

question 8

Multiple Choice

Business equipment is often depreciated using the double declining-balance method. In this method, a piece of equipment with a life expectancy of N years, costing C dollars, will depreciate to a value of V dollars in n years, where n is given by the formula: $n = \frac { \log V - \log C } { \log \left( 1 - \frac { 2 } { N } \right) }$ A computer that cost $10,000 has a life expectancy of 5 years. If it has depreciated to a value of $2,000, how old is it? Round the answer to the nearest tenth of the year.

• A)3.2 years old
• B)2.2 years old
• C)1.9 years old
• D)2.5 years old
• E)2.8 years old

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Definitions:

Coefficient Of Determination

A statistic that provides a measure of how well observed outcomes are replicated by the model, based on the proportion of total variation of outcomes explained by the model.

Coefficient Of Determination

A statistical measure represented by the symbol R², indicating the proportion of the variance in the dependent variable predictable from the independent variable(s).

Degrees Of Freedom

The number of independent values in a statistical calculation that are free to vary, often related to the number of observations in a dataset minus the number of constraints.

Sample Size

The number of individuals or instances taken from a larger population for the purpose of statistical analysis.