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

Given details are,

Present value of machine is = Rs 100000

Every year the depreciation in price is = 5%

So, value after two years = 100000 × (100-5)/100 × (100-5)/100

= 100000 × 95/100 × 95/100

= 90250

∴ Value of machine after two years is Rs 90250.