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Finance : Depreciation and Amortization

Value of the vehicle V depreciates T Months later V=10,000(.95)^t [for 0<T<36] How much is the depreciation? (those are less than or equal to signs) I already did the amort. portion. I need help with the depreciation. *The value should be 10,000 not 1000 as indicated in the problem.

I have a Finance problem. It is time to get a trade-in on your current vehicle. You go to the nearby dealership and see the vehicle of your dreams, worth $13,000. Your original car (all paid off) is worth $1000, and you trade it in. You also make a down payment of $2000 toward the vehicle you are buying. For doing this, you will qualify for a 3-year loan with an interest rate of 6% on the remaining $10000 balance.

The purpose of this problem is to make an amortization schedule for this 3-year loan. The minimum monthly payment required for this amortization is $304.22. Now, set up a table, so that you can show how much of each payment goes to interest and principal, as well as what is still unpaid. You may have to adjust the final monthly payment by a little bit. How much interest is paid overth the entire 3-year period? Finally, the value of the vehicle V depreciates, and its value T months later is calculated as V=10000(.95)^t [for 0,T,36]. How much is the car worth at the end of the 3 years? Compare your column of principal balances with the car's value after each month. What do you notice when you do the comparison month after month?

Solution Summary

Depreciation and amortization are investigated.