Question

Ms. Cherian purchases a boat for Rs. 16000. If the total cost of the boat is depreciating at the rate of 5% per annum, calculate its value after 2 years.

Answer 1

Given details are,

Price of a boat is = Rs 16000

Depreciation rate = 5% per annum

By using the formula,

A = P (1 + R/100)

= P (1 + R/100)²

Since it is depreciation we use P (1 – R/100)ⁿ

= 16000 (1 – 5/100) (1 – 5/100)

= 16000 (95/100) (95/100)

= 16000 (0.95) (0.95)

= 14440

∴ Value of the boat after two years is Rs 14440.