Question

The cost of a piece of machinery is $45,000. What is the value after five years with a depreciation rate of 12%?
A. $21,252.06
B. $23,747.94
C. $42,364.03
D. $44,730.65

Answer 1

its depreciating 12% each year

Answer 2

after 1 year, its value wud be :-
45,000 - 12% of 45,000

Answer 3

after 2 years, its value wud be :-
(45,000 - 12% of 45,000 ) - 12% of (45,000 - 12% of 45,000 )

Answer 4

keep going 5 times..

Answer 5

if that confuses enough, scratch all above, and use the simple compound interest formula :-

\(\large A = P(1 - r)^n\)

Answer 6

P = 45,000
r = 12% = 0.12
n = 5

Answer 7

plug and chug

Answer 8

The answer is 23747.94 but I don't know how to explain it well enough.