Time Value of Money

Concept:Depreciation reduces the value by a fixed percentage each year, so the remaining value is a constant fraction of the previous year's value.Explanation:Let the present value be $P = \text{Rs}\,24,000$.Depreciation rate $r = 20\% = 0.20$ per year.After each year, the value becomes $(1 - r) = 0.80$ times the previous year's value.Value after 5 years = $P \times (0.80)^5$.Compute $(0.80)^5$: $0.80^2 = 0.64$, $0.80^4 = 0.64^2 = 0.4096$, $0.80^5 = 0.4096 \times 0.80 = 0.32768$.Thus, value = $24000 \times 0.32768 = 7864.32$.Answer:The estimated value after five years is $\text{Rs.}\,7864.32$.