Calculate both depreciation rates

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Q. A ‘linear deprecation' is characterized by a loss in value by constant amounts per year. In Table below this can be $1000 per year. In ‘geometric depreciation' 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? Linear dep: price = b0 + b1*age + e Geometric dep ln(price) = b0 + b1*age + e Why might calculated depreciation rates not reflect ‘true' depreciation?

Reference no: EM1369153

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