The value of a machine depreciates every year by 5%.
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

$\therefore$ For the first year, $5 \%$ of $100000=\frac{5}{100} \times 100000$

$=$ Rs 5000

$\therefore$ Value of the machine after one year $=100000-5000=$ Rs 95000

Value of the machine in the second year $=$ Rs 95000

$\therefore 5 \%$ of $95000=\frac{5}{100} \times 95000$

$=$ Rs 4750

$\therefore$ Value of the machine after 2 years $=95000-4750=$ Rs 90250

$\therefore$ After two years, the value of the machine will be Rs 90,250 .