To calculate the depreciation of the cell phone's value over two years with a yearly depreciation rate of 25%, we follow these steps:
1. Determine the initial cost of the cellphone.
2. Calculate the depreciated value after the first year.
3. Calculate the depreciated value after the second year.
Let's go through it step by step.
1. We know that the initial cost of the cellphone is $900.00.
2. After the first year, the cellphone's value depreciates by 25%. To calculate the value after one year, we multiply the initial cost by 75% (which is 100% - 25% depreciation rate), or equivalently by 0.75.
So after one year, the value is:
\( $900.00 \times 0.75 = $675.00 \)
3. Now, to find the value of the cellphone after the second year, we apply the depreciation rate again to the value at the end of the first year. The value at the start of the second year is $675.00, so we again multiply this by 0.75 to account for another 25% depreciation.
So after two years, the value is:
\( $675.00 \times 0.75 = $506.25 \)
Thus, after 2 years, the cellphone will cost $506.25.
