Question

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.

a) Rs. 2500
b) Rs. 4000
c) Rs. 6400
d) Rs. 10240

Answer 1

To find the estimated value of the machine at the end of 5 years, we can use the formula: Value = Initial Value × (1 - Depreciation Rate)^(Number of Years). Plugging in the given values, the estimated value is approximately Rs. 5117.

Step-by-step explanation:

To find the estimated value of the machine at the end of 5 years, we can use the formula:

Value = Initial Value × (1 - Depreciation Rate)Number of Years

In this case, the initial value of the machine is Rs. 15625, and the depreciation rate is 20% (or 0.2). Plugging these values into the formula, we get:

Value = 15625 × (1 - 0.2)5

Simplifying the expression:

Value = 15625 × 0.85

Calculating 0.85 = 0.32768, we get:

Value ≈ 15625 × 0.32768 ≈ 5117

Therefore, the estimated value of the machine at the end of 5 years is approximately Rs. 5117.