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v1 Financial Maths, STD2 F4 2021 HSC 4 MC

A machine was purchased for $3200 four years ago. It depreciates at a rate of 12% per year using the declining-balance method.

What is the machine’s current value, to the nearest dollar?

  1. $1850
  2. $1919
  3. $1945
  4. $2010
Show Answers Only

`B`

Show Worked Solution
`S` `= V_0 (1-r)^n`
  `= 3200 (1-0.12)^4`
  `= 3200 (0.88)^4`
  `= 3200 × 0.5997`
  `= 1919`

⇒ `B`