Question

The value of a computer is decreasing at a rate that is proportional at any time to the value of the computer

at that time.
The computer is worth $850 initially, and it is worth $306 after 2 years.
How much will the computer be worth after 5 years?
A. $0
B. $66
C. $79

Answer 1

The computer be worth after 5 years = $ 66 (option B)

Explanation:

The price of computer = 850

The price of computer after 2 years = 306

By compound depreciation,

`Pn = P (1 - (R)/(100) ) ^ T` ... (i)

where Pn = 306

P = 850

R = rate of interest to be calculated

T = 2( number of years)

substituting the values in equation (1), we get

`306 = 850 (1 - (R)/(100) ) ^ 2`

0.6 = 1 -
`(R)/(100)`

R = 40%

The worth after 5 years =

`Pn = 850 (1 - (40)/(100) ) ^ 5`

Pn = 850 (0.077)

= $66.096 = $ 66

The computer be worth after 5 years = $ 66 (option B)