Question

The value of a machine, V, at the end of t years is given by V = C(1 - 1)', where is the original cost and r is the rate of depreciation. Find the value of a machine at

the end of 2 years if the original cost was $576 and r = 0.1. Round to the nearest cent.

Answer 1

The value of the machine after two years is approximately $466.6

Explanation:

The details of the valuation of the machine are;

The function giving the machine value, 'V', is V =
`C \cdot (1 - r)^t`

Where;

C = The original cost of the machine

r = The depreciation rate

t = The time the machine has been in service

When C = $576, r = 0.1, t = 2 years, we have;

`V = 576 * (1 - 0.1)^2 = 466.56`

Therefore, the value of the machine that costs $576 having a depreciation of 0.1 after 2 years is, V = $466.58

By rounding to the nearest cent, we have, V = $466.6.