Problema Solution
Cheryl bought her house in 1995 for $365,000 and has seen its value steadily decline to its current value of $209,000. If this depreciation has been calculated annually, then by what rate has the value of Cheryl's house been declining?
Answer provided by our tutors
The rate of declining annually : r
We assume the current year is 2011, so 2011-1995 = 16 years
The value declines steadily, so the equation is
$365,000 - 16*r = $209,000
r = $9,750
So the rate of depreciation is $9,750 per year