Question

A manufacturer reckons that the value of a machine, which costs him Rs. 15625, will depreciate each year by 20%. Find the estimated value at the end of 5 years.

Answer 1

Cost of machine = Rs 15625
Machine depreciates by 20% every year.
Therefore, its value after every year is 80% of the original cost i.e., $\frac{4}{5}$ of the original cost.
∴ Value at the end of 5 years =$15625 × \frac{4 }{5} × \frac{4 }{ 5} × .... × \frac{4 }{ 5 }→ 5\,\, times$ = 5 × 1024 = 5120
Thus, the value of the machine at the end of 5 years is Rs 5120.