Modelling Reducing Balance Depreciation with a Recurrence Relation is a part of the VCE Further Maths topic Recursion and Financial Modelling. It is part of the subtopic Depreciation of Assets. This section looks at using a first-order linear recurrence relation to model flat rate and unit cost. It is also used to reduce balance depreciation of an asset over time.
Reducing balance depreciation causes the decline in the depreciation amount per period. This means that depreciation occurs at a higher rate in the earlier time of a set period. It also means that the amount of depreciation continues to lessen through time.
How to Analyse Reducing Balance Loans
Watch this following video to look at how to analyse reducing balance loans using recurrence relations.
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