A “linear deprecation” is characterized by a loss in value by constant amounts per year. In the Tab
A “linear deprecation” is characterized by a loss in value by constant amounts per year. In the Table below this can be $1000 per year. In “geometric depreciation” the value of a car declines by a constant percentage, i.e., 20%. In order to calculate both depreciation rates, how would you specify both equations? (4 pts) Linear dep: price = b0 + b1*age + e Geometric dep ln(price) = b0 + b1*age + e Why might the calculated depreciation rates not reflect the “true” depreciation?
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