Question

A woman bought a stove for $2800. After using it for 2 years she decided to trade in the stove. The company estimated a depreciation of 15% for the first year of its use and a further 15% on its reduced value, for the second year.

i.) Calculate the value of the stove after two years.
ii.) Express the value of the stove after two years as a percentage of the original value. (5mks)

Answer 1

$1719.55, 61.4%

Explanation:

Original price of stove: $2,800

Value of stove after 1 year: (1 - 0.15)($2,800), or 0.85($2,800) = $2,380

Value of stove after 2 years: 0.85($2,380) = $1719.55

Find the ratio of this last result to the original price and convert that to a percentage:

$1,719.55

-------------- = 0.614, or approximately 61.4%

$2,800