It starts out being worth $100,000 (One hundred thousand dollars). Every year it depreciates by 5% (0.05). What is the value after two years? We can find this by multiplying.
100,000 * 0.05 = 5,000
100,000 - 5,000 = 95,000
95,000 * 0.05 = 4,750
95,000 - 4,750 = 90,250
The machine, after two years, will be worth $90,250.
