Question

a product initially with a value of $2000 has been depreciating at 7% p.a. over 2 years. What is the current value?

Answer 1

$1729.8

Step-by-step explanation

Step 1

as the rate is 7 %, after the first year the value is

`\begin{gathered} Value_1=2000\cdot(1-(7)/(100)) \\ \\ \text{Value}_1=2000(0.93) \\ \text{Value}_1=1860 \end{gathered}`

it means after 1 year the product has a value of $1860

Step 2

now, for the year 2, do the same

`\begin{gathered} \text{Value}_2=value_1(1-(17)/(100)) \\ \text{replace} \\ \text{Value}_2=1860(0.93) \\ \text{Value}_2=1729.8 \end{gathered}`

so, after 2 years the value is $1729.8

I hope this helps you