The value of a ma

Let value of a machine 2 years ago, = P

Present value of machine = Rs.40000

Time, n = 2 years

Rate of depreciates, R = 20% per annum

Now,

Amount (A) = P (1 + R/100)n [Where, A = Amount with compound interest

P = Present value

R = Annual interest rate

n = Time in years]

Value = P (1 - R/100)n [ Rate decreases]

40000 = P (1 - 20/100)2

40000 = P (1 - 1/5)2

40000 = P (4/5)2

40000 = P × 16/25

P = 40000 × 25/16

P = 2500 × 25

P = 62500

Value of a machine 2 years ago is Rs.62500.

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