A plant depreciates by 10% annually. Given a current value of Rs. 100000, what will it be worth in 2 years?
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Answer: D. Rs. 81000
Explanation
Annual depreciation reduces the value of an asset by a fixed percentage multiplier each year of its operational life. A ten percent depreciation rate leaves a remaining value factor of zero point nine each successive year. Multiplying the initial value of one hundred thousand by zero point nine squared yields a depreciated worth of eighty-one thousand. Depreciation measures the gradual reduction in economic value of physical assets due to age, wear, or obsolescence. Exponential decay formulas model situations where quantities decrease by proportional factors over regular time intervals. Initial asset value represents the starting monetary worth before any depreciation or amortization factors are applied.
Option A suggests eight thousand, which represents an excessive depreciation loss that ignores the compound factor. Option B proposes ten thousand, which incorrectly assumes a linear ten percent total loss rather than annual compounding. Option C offers eighteen thousand, which fails to calculate the correct exponential decay product for the two-year period.
- Subject
- Mathematics
- Category
- Mathematics
- Topic
- —
- Difficulty
- medium
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