A manufacturer reckons that the value of a machine, which costs him Rs. 15625, will depreciate each year by 20%. Find the estimated value at the end of 5 years.

Explanation

Cost of machine =Rs.15625

Machine depreciates by 20% every year.

Therefore its value after every year is 80% of the original cost i.e. 54​ of the original,

Value at the end of five years `=15625xx4/5​xx4/5​xx4/5​xx4/5​xx4/5​
`
`=5xx1024=5120`

Thus the value of the machine at the end of 5 years is Rs.5120.