Percentages SAT question

Choice B is correct. If the stove’s value depreciates by 20% of the previous year’s estimated value, then each year it retains 100% – 20% = 80%, or 0.80, of the previous year’s estimated value. Since the stove’s value was $800 when Thomas installed it, the estimated value after two years would be (0.80)(0.80)($800) = $512.

Choice A is incorrect. This is the value of the stove if each year it had depreciated by 20% of the original value rather than by 20% of the previous year’s estimated value. Choice C is incorrect and may be the result of a computational error. Choice D is incorrect. This is the estimated value of the stove 1 year after Thomas installed it, not 2 years.