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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?
Solution
It is given that the value of the machine depreciates by 5 % every year.
Present value of the machine = Rs 100000
\[ \therefore \text{ For the first year }, 5 \%\text{ of }100000 = \frac{5}{100} \times 100000\]
= Rs 5000
∴ Value of the machine after one year = 100000 - 5000 = Rs 95000
Value of the machine in the second year = Rs 95000
\[ \therefore 5 \% \text{ of }95000 = \frac{5}{100} \times 95000\]
= Rs 4750
∴ Value of the machine after 2 years = 95000 - 4750 = Rs 90250
∴ After two years, the value of the machine will be Rs 90, 250.
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