Question

The value of a machine depreciates by $5$ % each year. A man pays $Rs.30,000$ for the machine. Find its value after three years.

Answer 1

Present value of the machine $P=$ $30,000$, Rate of depreciation $r=5$%, Number of years $n=3$
The value of the machine after '$n$' years $=P{(1-\frac{r}{100})}^n$
$\therefore$ The value of the machine after three years $=30000{(1-\frac{5}{100})}^3$
$=30000{\left(\frac{95}{100}\right)}^3$
$=30000\times \frac{95}{100}\times \frac{95}{100}\times \frac{95}{100}$
$=25721.25$
The value of the machine after three years is $Rs.25,721.25$