Question

The value of a machine depreciate each year by 5% of its value at the beginning of that year. If its value when new on first 1968 was 10250,what was its value in January 1978?

Answer 1

Depreciated value on January 1978 is `6137` unit

Explanation:

Initial value is `I= 10250`, depreciation rate is

`r=5%=5/100=0.05; t =1978-1968=10` years

Depreciated value after `10` years is `D=I(1-r)^t`

`:. D=10250(1-0.05)^10~~ 6137.05 (2 dp)`

Depreciated value on January 1978 is `6137` [Ans]