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Depreciation question

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Depreciation question

by ern5231 » Mon Aug 10, 2009 1:14 pm
An equipment's worth is 10,000 intially. Each year the value is 80% of the prior year's value. What' s the greatest value of the equipment after 9 years? The answer is in thousands.

A) (10*0.8)^8
B) (10*0.8)^9
C) 10*(0.8)^8
D) 10*(0.8)^9
E) (100*0.8)^9

I am totally clueless about this coz I am not getting anything close to the answer. The answer given is D! Can someone also explain any shortcut to do this?
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by tohellandback » Mon Aug 10, 2009 7:35 pm
year 1:
.8*10000
year 2:
.8 * .8 *10000

year 9

10000 * (.8)^9


answer D
just in case you didn't notice, its mentioned that the values are in "thousands"
The powers of two are bloody impolite!!
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by tom4lax » Wed Aug 12, 2009 5:04 am
I always tend to get confused in these types of questions. The first year is still $10,000. At the beginning of the second year, value is $10,000*.8

Question is asking what is the value AFTER the ninth year, so beginning of the tenth year. $10,000*.08^9.

I only bring it up as a technicality because the previous poster had listed the value as $10,000*0.8 in year one, with i think in fact that is incorrect.
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by shahdevine » Wed Aug 12, 2009 5:11 am
tom4lax wrote:I always tend to get confused in these types of questions. The first year is still $10,000. At the beginning of the second year, value is $10,000*.8

Question is asking what is the value AFTER the ninth year, so beginning of the tenth year. $10,000*.08^9.

I only bring it up as a technicality because the previous poster had listed the value as $10,000*0.8 in year one, with i think in fact that is incorrect.
agree here.

first year its 10000
second year its 10000*.08

could someone else verify? this is classic gmat sketchiness.
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