Question

The value of a machine worth 45,000 rupees is decreasing at the rate of 20% per annum. Find the total reduction after 2 years?

Answer 1

Total reduction after 2 years =
`16,200` rupees

Explanation:

Current price of a machine
`(P_0)` = 45,000 rupees

Rate of depreciation (r) = 20%

Time (t) = 2 years

Price after 2 years =
`P_0(1-(r)/(100) )^t`

`=45000(1-(20)/(100))^2 \\=45000(1-(1)/(5))^2\\ =45000((4)/(5))^2\\ =45000((16)/(25))`

`=28800\,\,` rupees

Total reduction after 2 years =
`P-P_0=45,000-28,800=16,200` rupees