Problema Solution
A new welding machine valued at $38,000 depreciates at a steady rate of 9% per year. What is the value of the welding machine in 10 years?
Answer provided by our tutors
1st year: $38,000
2nd year: 38,000 - 0.09*38,000 = (1 - 0.09)*38,000 = 0.01*38000
3rd year: 0.91*38000 - 0.09*0.91*38000 = (0.91^2)*38000
4th year: (0.91^3)*38000
....
10th year: (0.91^9)*38000 = $16,261.33
The value of the welding machine in 10 years will be $16,261.33.