Q. 313.9( 26 Votes )

# A manufacturer reckons that the value of a machine, which costs him Rs. 15625, will depreciate each year by 20%. Find the estimated value at the end of 5 years.

Answer :

By Using Formula

A = P[1 - (r/100)]^{n}

Here, P = principal = Rs. 15625

r = rate of depreciation = 20%

n = number of years = 5 years

A be the depreciated value

Putting values in the formula,

Depreciated Value = 15625[1 - (20/100)]^{5}

= 15625[1 - (1/5)]^{5}

= 15625(4/5)^{5}

= (15625 × 1024)/3125

= 5 × 1024

= 5120

Thus, the depreciated value of the machine after 5 years is

Rs. 5125.

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