Question

The XYZ company is seeing it's worth declining at a rate of 3.2% per year. If the current worth is 2,300,000, what will the value be in 5 years?

A.) about $1,954,810

B.) about$2,692,318

C.) about $1,932,000

D.) about $1,951,836

Answer 1

Every year the company's worth is declining at a rate of 3.2%. If the current worth is 2,300,000 then after one year the worth will be:

2,300,000 - 3.2% of 2,300,000=2,300,000-73600=2,226,400
after two years the worth sill be:

2,226,400 - 3.2% of 2,226,400 =2,226,400 - 3.2/100*2,226,400 =2,226,400 -71244=2155156
after three years the worth will be:
2155156-3.2/100*2155156=2155156-68965=2086191
after four years the worth will be:
2086191-3.2/100*2086191=2086191-66758=2019433
after 5 years the worth will be:
2019433-3.2/100*2019433=2019433-64621=1954812

A)
about $1,954,810