Question

The value of a machine depreciates every year by 10%. What will be its value after 2 years, if its present value is Rs 50,000?

Answer 1

actual price of the machine = Rs. 50000
decrease in price in 1st year = 10%
amount of decrease in 1st year = (10/100)*50000
= Rs. 5000
price of the machine after decrease = 50000-5000
= Rs. 45000
decrease in price in the 2nd year = 10%
amount of decrease in price in the 2nd year = (10/100)*45000
= Rs. 4500
therefore the final price of the machine after 2 years = 45000-4500
                                                                            = Rs. 40500

Answer 2

Answer:
   Shortcut Method :
             Worth After N Years=Present Worth (1 - Rate of Depreciation )^N
             Here ,
           N = 2
           Rate of Depreciation = 10 %
           Present Worth = 50,000
Therefore ,
         Worth of Machine After 2 years = 50,000(1-10/100)^2
                                                       = 50,000(9/10)(9/10)
                                                       = 50,000 *81/100
                                                       = 500*81
                                                       = 40,500

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