Compound interest

Question

A manufacturer estimates that the value of his machinery depreciates by 15% of its value at the beginning of the year. Find the original value (cost) of the machine if it depreciated by Rs.5355 during the second year.

Answer 1

assume the original cost of machine is M

Depreciation during 1st year is 0.15M

Value at the beginning of 2nd year, after deprecation during the first year  = 0.85M

Depreciation during 2nd year is 0,15(0,85M) - 5355   Hence M=5355/(0.15 X 0.85)  =Rs. 42000