A manufacturer reckons that the value of a machine which costs him

Question:

A manufacturer reckons that the value of a machine which costs him 156250, will depreciate each year by 20%. Find the estimated value at the end of 5 years.

Solution:

To find: The amount after five years

Given: (i) Principal – 156250

(ii) Time – 5 years

(iii) Rate – 20% per annum 

Formula used: $A=P\left(1-\frac{r}{100}\right)^{t}$

$\Rightarrow A=156250\left(1-\frac{20}{100}\right)^{5}$

$\Rightarrow A=156250\left(\frac{80}{100}\right)^{5}$

$\Rightarrow A=156250(0.8)^{5}$

$\Rightarrow A=156250 \times 0.32768$

$\Rightarrow A=51200$

Ans) The amount after five years will be Rs. 51200

 

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