Under declining-balance depreciation, a tractor is worth50% of purchase price after four years. Find constant annual depreciation rate in percent, to two decimals.
If the annual remaining-value factor is 1−r, the value after four years is $P(1-r)^4=.5P$. Cancel P: $1-r=.5^{1/4}$ and $r=1-.5^{1/4}=.1591036$. Therefore **15.91%** per year. Declining balance applies this percentage to each year’s remaining value.
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