Question

11. Abel Industries bought a fax machine for $250. It is expected to depreciate at

a rate of 25% each year. What will be the value of the fax machine in 4 years?

Answer 1

$79.10

Explanation:

We are given the information that the fax machine is $250. By depreciating at a rate of 25% each year, what will the value be in 4 years? To solve this problem, we can use a general decline formula as shown below:

`A=P(1-r)^t`

A = total amount

P = original amount

r = growth rate (decimal)

t = years

Before we plug in the values, don't forget to change 25% to its decimal form.

25% ->
`(25)/(100)` -> 0.25

Now, lets plug in the values.

`A=250(1-0.25)^4`

`a=79.10`

The value of the fax machine in 4 years will be $79.10.