Question

If you spend $50,000 on new furniture and it is depreciating about 20% per year, how much will it be worth by its third year?

Answer 1

Answer:

$25,600

Step-by-step explanation:

• Given: P = $50,000, r = 20% & t = 3 years

• Formula for depreciation is given as:

• $A(t) = P\bigg(1-\frac{r}{100}\bigg)^t$

• Plugging the values of P, r and t in the above formula, we find:

• $A(3) = 50,000\bigg(1-\frac{20}{100}\bigg)^3$

• $\implies A(3) = 50,000\bigg(1-\frac{1}{5}\bigg)^3$

• $\implies A(3) = 50,000\bigg(\frac{4}{5}\bigg)^3$

• $\implies A(3) = 50,000\times\frac{64}{125}$

• $\implies A(3) =\ 25,600$

• So, after third year it will be worth by $25,600.