Wize High School Grade 9 Math Textbook > Financial Literacy
Appreciation & Depreciation
0:00 / 0:00
Appreciation & Depreciation
Article by Peter Evans at https://www.cbc.ca/news/business/crea-may-housing-stats-1.6065969
Many news headlines will talk about the value of a product going up or down over time. This is called appreciation (value increases) and depreciation (value decreases).
Examples of appreciation and depreciation
- The price of a house appreciates on average 10% year over year
- The value of a brand new car typically depreciates between 40-50% within its first five years
- Collectable baseball cards may appreciate in value over time
Linear VS Non-Linear Appreciation & Depreciation
Sometimes appreciation and depreciation will be linear, meaning that the value of the product will increase or decrease at a steady rate. Other times, appreciation and depreciation can be non-linear.
Practice: Linear VS Non-Linear Appreciation and Depreciation
For each of the following scenarios,
a) decide if we have an appreciation or deprecation.
b) decide if the appreciation or depreciation is linear or non-linear.
The house price in the town Puedam is given by the following graph (the horizontal axis shows time in years, the vertical axis shows prices in $):
Practice: Phone Prices
The following graph shows the re-sale value of two different phones: the J-phone is represented by the blue solid line, and the Bandrod phone is represented by the green dotted line.
a) Over time, does the value of the J-phone appreciate or depreciate?
b) Is the appreciation or depreciation of the J-phone linear or non-linear?
c) Over time, does the value of the Bandrod phone appreciate or depreciate?
d) Is the appreciation or depreciation of the Bandrod phone linear or non-linear?