Question

The cost of a machine is supposed to

depreciate each year by 12% of its value at
the beginning of the year. If the machine is
valued at 344,000 at the beginning of 2008,
find its value
(i) at the end of 2009.
(ii) at the beginning of 2007.​

Answer 1

i) 302720

ii) 390909.09

Explanation:

So to that end, here's the formula:

`future \: value = (present \: value){(1 - rate)}^(time)`

In part i, we do the following:

`344000 {(1 - .12)}^(1) = 302720`

In part ii, we do the following:

`344000 {(1 - .12)}^( - 1) = 390909.09`