Question

The local parts shop buys a machine that costs $500,000. It’s value depreciates exponentially each year by 10%

Answer 1

Cost of Machine =$ 500,000

Rate of Depreciation =10 %

Depreciation Formula is given by and value of Machine after a year can be calculated by

`=\text{Principal}* [1-(R)/(100)]^n\\\\=500000 * [1-(10)/(100)]^1\\\\=500000 * (90)/(100)\\\\=450,000`

Value of machine after a year =$450,000

Depreciation value =$500,000-$450,000

= $ 50,000