Question

the price of a machine depreciates by 10% everyear. If the machine is bought for $18000 and soldfter 3 years, what price will it fetch?a $13122b $17376c $16264d $12325

Answer 1

The given information is:

- Rate of depreciation 10%

- Price of the machine $18000

- It was sold after 3 years

We have to find what price it will fetch.

The value of the machine after 3 years is given by the following formula:

$Q=P(1-\frac{r}{100})^n$

Where P is the present value, r is the depreciation rate and n the number of years, so:

$\begin{gathered} Q=18000(1-\frac{10}{100})^3 \\ Q=18000(1-0.1)^3 \\ Q=18000(0.9)^3 \\ Q=18000(0.729) \\ Q=13122 \end{gathered}$

Thus, the machine will fetch 13122 after 3 years.

The answer is a. $13122