Depreciation as a timeframe

The value of some items fall over time.

Things like cars, televisions or computers are worth less and less as they get older.

This is called depreciation.

Items that depreciate have a depreciation rate; it tells us by what percentage their value decreases each year.

A depreciation rate of 20% means that each year the item is worth 20% less than the year before.

The formula for depreciation is,

where

      A is the amount it is worth
      P is the initial value
      R is the depreciation rate as a decimal
      n is the number of years

The amount an item depreciates is P - A.

This is also referred to as the amount of depreciation.