Ms. Cherian purchased a boat for Rs 16000. If the total cost of the boat is depreciating at the rate of 5% per annum, calculate its value after 2 years.

Explanation

Given:
Ms. Cherian purchased a boat for `(P)=Rs.16000`.
The total cost is depreciating at the rate of `(R)=5%` per annum.
Time period `(n)=2` years.
As the total cost is depreciating, therefore we will use:
`A=P(1-R/100)^n`
`A=16000(1-5/100)^2`
`A=16000(1-1/20)^2`
`A=16000((20-1)/20)^2`
`A=16000(19/20)^2`
`A=16000times(361/400)`
`A=40times361`
`A=14440`
Hence, the value of boat after `2` years will be `Rs.14440`.