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Decline esign deponent

in this video we'll use something called declining balance depreciation please pause the video read the problem and when you're ready to see the solution and restart the video so in this problem there's some similarities to the problem we where we looked at straight-line depreciation in terms that we have the same value of the asset initially so our P we read in the problem is a hundred and fifty thousand dollars the difference here is that the question instructs us to use declining balance depreciation well what does that mean in contrast to the straight-line depreciation we viewed declining balance depreciation as the same type of graph where we look at the book value of the asset over time and we have we start with a certain purchase price so for instance in this case 150,000 dollars rather than the book value declining linearly the book value now declines each year as a percentage of the previous years ending Book value and if you connect the dots for each of those discrete time frames you would end up with something that looks sort of like this where each interval of time is associated with a particular depreciation expense and this depreciation expense or loss in book value is a percentage of the book value at the beginning of the year or the end of the previous year we almost always use years as the the time frame or the time interval in depreciation problems that's related to the accounting and the financial statements of a company which are prepared yearly so all we need to know to define the shape of this line is really the rate so by what percentage does the book value decline each year and we're told in the problem that the depreciation rate is 20% and we use little D to denote our depreciation rate later on we'll learn sort of where this depreciation rate comes from in real life in Canada we separate assets into classes and each different class of asset has a different appreciation rate associated with it but in this problem we were just given the rate of 20% we don't need to determine what type of asset and what accounting depreciation rate is specified for any particular accounting jurisdiction so in in viewing how this works it's really quite simple if we'd like to calculate how much the asset declines in value over the first year we could actually just work it out we can say well I can even just use the variables for this if I start here with the value of P as the initial book value of the equipment at time T equals 0 I simply multiply by 1 minus D where D is the depreciation rate so if you just think for a moment with the numbers if I plug in 0.2 here or my 20% I'm really multiplying P by 80% or 0.8 so what it means is at the end of...