Question

The value of a machine depreciates every year by 5%. If the present value of the machine be Rs. 100000, what will be its value after 2 years?

Answer 1

Present value of machine =Rs. 100000

Rate of depreciation per year =5%

Period =2 years

$\therefore$ Value of machine after 2 years

=Rs. 100000 $\frac{(100-5)}{100}\times \frac{100-5}{100}$

=Rs. 100000 $\times \frac{95}{100}\times \frac{95}{100}=Rs.90250$