The graph below shows the depreciation of a motorcycle's
value over time.
And they shows us the graph and they say during which
two-year span does the most rapid-- let me underline
that-- the most rapid depreciation occur.
So depreciation just means loss in value.
And this shows the motorcycle's value.
You can just eyeball this here.
Let's just look at what this chart's saying.
This is saying right when the motorcycle is brand new, when
it's zero days old, zero years old, I should
say, it is worth $10,000.
And then when it's one year old, it's looks like it's a
little over $6,000.
And when it's two years old, it looks
like it's about $5,000.
Then at three years, it's about $4,000.
And so on and so forth.
So this curve shows how it depreciates, how
it loses its value.
And they're saying when is the most rapid
depreciation occurring?
And they don't want to know what year, they want a
two-year span when we have the most rapid depreciation.
Now, one thing you can look at here, you can just kind of
eyeball it.
You could say, look, the beginning of this curve is
this steepest part.
It's steepest over these two years than over any other
two-year period.
Out here, it's kind of a very shallow-- it's almost flat in
terms of how quickly it's losing value, so it's not
losing value too quickly.
So if you just eyeballed it, you would just say, well, the
most rapid depreciation is occurring over the first two
years, from zero to two years up to this point because you
can see the curve is getting less and less steep the entire
time, but it's most steep over those first two years.
Now, if you didn't want to just eyeball it and really
verify that it loses the most value over the first two years
than any other two-year period, let's actually
calculate it.
So after from zero-- so let me write two-year period and
let's write lost value, or we could call it depreciation,
either way.
So from zero to two years, we went from $10,000 to what
looks like about $5,000, right?
That looks right at about $5,000.
So we lost $5,000 of lost value.
Then if we go from one to three years, what happened?
One to three years, that's the other two-year period.
You go from one to three years, we started at it looks
like about $6,100, maybe $6,200 or so,
and we went to $4,000.
So we lost about $2,200, so definitely less than what we
lost in the first two years.
Then if we look at the second through the fourth year, we
went from about $5,000 to about $4,000, so we lost about
$1,000 in value, maybe a little less.
Yeah, that's about what we went from years two to four,
about $5,000, or maybe a little under $4,000, so I'll
give it a little bit more value, so maybe it's like
$3,800 right there, so maybe on the order of $1,200.
And then if you go from year three to year five, we're
going from about $4,000 to looks like about $3,600 if I
had to eyeball it, so it looks like we lost about $400.
So if anything, as we go further and further in time,
each two-year period we're losing less value.
So then finally if we go from four to six years, it looks
like we're at about $3,800 and we end up at about-- I don't
know what this value looks like.
It's about-- I would say it's maybe $3,500 or maybe we're
going from $3,700.
We're losing about $300.
It's shallower than it was before.
So the most rapid depreciation occurs in the first two years.
And you didn't have to go through this exercise.
You could have just looked at the chart and said, hey, look
how steep it is the first two years compared to all of the
years after that.