Episode 2 — Finance Growth and Decay

Compound Depreciation

Learners will be able to:

• Describe the concept of depreciation and its relation to decay in an asset's value. • Identify the formula for compound depreciation as A = P × (1 - i)^n. • Explain the difference between the rate of depreciation and interest, and how it is represented in the formula. • Calculate the final value of an asset using the compound depreciation formula. • Describe reducing balance depreciation as a method of calculating depreciation on the reduced value of an asset.