Question

Edudig Digger

£35950
Samir buys this digger and expects to use it for 1250 hours each year.
The digger will decrease in value at a yearly rate of 18% of its value at the end of the previous
year.
Use this information to calculate the decrease in value of Samir's digger when it has been
used for 10000 hours.

Answer 1

Answer: To calculate the decrease in value of Samir's digger after 10000 hours, we need to determine its value at the end of each year, taking into account the yearly depreciation of 18%.

Here's the calculation for the first year:

Value at the end of Year 1 = £35950 - (£35950 * 18%) = £29576

And for the second year:

Value at the end of Year 2 = £29576 - (£29576 * 18%) = £24480.48

And so on, until we reach 10000 hours. To determine the exact value after 10000 hours, we would need to perform the calculation for each year until we reach the total number of hours used. However, this calculation would involve multiple steps and can become quite complex. A simpler way to estimate the decrease in value would be to use the concept of present value.