A machine worth 8000 loses 25 percent a year on a reducing-balance basis. What is it worth after 2 years?

1. Reducing-balance depreciation is worked out on the reduced value, not on the original value. 2. In year one, 25 percent of 8000 is 2000. 3. Subtracting gives 8000 minus 2000, which is 6000 at the end of year one. 4. That 6000 becomes the starting value for year two. 5. In year two, 25 percent of 6000 is 1500. 6. Subtracting gives 6000 minus 1500, which is 4500. 7. So the value after 2 years is 4500. 8. Answering 4000 takes 2000 off twice, which is the straight-line method instead. _Source: Siyavula Mathematics Grade 11 (Everything Maths, CC BY 4.0), Chapter 9: Finance, growth and decay_