Question:
A manufacturer reckons that the value of a machine which costs him 156250, will depreciate each year by 20%. Find the estimated value at the end of 5 years.
Solution:
To find: The amount after five years
Given: (i) Principal – 156250
(ii) Time – 5 years
(iii) Rate – 20% per annum
Formula used: $A=P\left(1-\frac{r}{100}\right)^{t}$
$\Rightarrow A=156250\left(1-\frac{20}{100}\right)^{5}$
$\Rightarrow A=156250\left(\frac{80}{100}\right)^{5}$
$\Rightarrow A=156250(0.8)^{5}$
$\Rightarrow A=156250 \times 0.32768$
$\Rightarrow A=51200$
Ans) The amount after five years will be Rs. 51200