Question

Q8
Crude oil reserves depreciate at a rate of 10% each year. If you buy crude oil today for
$12000. Estimate how much will it cost after 5 years?

Answer 1

Answer:

cost if crude oil $12000

depreciation for 1st yr = 10/100*12000 = 1200

12000-1200 = 10800

depreciation for 2nd yr = 10/100*10800 = 1080

10800-1080 = 9720

depreciation for 3rd yr = 10/100*9720 = 972

9720-972 = 8748

depreciation for 4th yr = 10/100*8748 = 875

8748-875 = 7873

depreciation for 5th yr = 10/100*7873 = 787

7873-787 = 7086

hence the cost of crude oil after 5 years is $ 7086