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Financial mathematics and modelling
Lesson 72 of 75
Easy practice

Depreciation

Objective. Model repeated percentage decrease over time.

  1. 1. Learn
  2. 2. Worked example
  3. 3. Practice
  4. 4. Feedback
  5. 5. Continue

Learn: the key idea

Depreciation develops a connected mathematical idea rather than an isolated trick. Use mathematics to evaluate realistic choices and uncertainty. Begin by representing the quantities or relationships, choose a rule that fits, justify each transformation, and finish by checking units, signs, scale and whether the answer is reasonable.

Worked example

Why compare tariffs at the expected usage?

fixed and variable costs …
Illustrated card showing fixed and variable costs affect the total
  1. 1Identify the known information, the unknown and any conditions.
  2. 2Choose a diagram, table, graph or algebraic representation that exposes the structure.
  3. 3Apply the relevant rule one justified step at a time, keeping exact values where useful.
  4. 4Check by substitution, inverse reasoning or estimation. The result is fixed and variable costs affect the total.

Answer: fixed and variable costs affect the total

Concept mastery

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Practice

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Common mistake. A common error in depreciation is to copy a procedure without checking its conditions. Label the structure first and justify every sign, operation and unit.

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