Question

The value of a new bike is $Rs.50,000$. If the value depreciates by $5\%$ every year, find the value of the bike after $2$ years.

Answer 1

Given,

Initial price $P=Rs.50,000$

Rate of depreciation $R=5\%$

Time $T=2$ years

So, $n=2$

Amount, $A=P{(1-\frac{R}{100})}^n$

$=Rs.50,000\times {(1-\frac{5}{100})}^2$

$=Rs.50,000\times {(1-\frac{1}{20})}^2$

$=Rs.50,000\times {\left(\frac{19}{20}\right)}^2$

$=Rs.50,000\times \frac{19}{20}\times \frac{19}{20}$

$=Rs.45,125$

Hence, the price of the bike after $2$ years will be $Rs.45,125$.