Question

A bike valued at ₹ 40,000. If its value falls at 5% per year, what will be its value after 2 years?

• A. Rs.36,500
• B. Rs.36,100
• C. Rs.35,100
• D. Rs.36,150

Answer 1

The correct option is B Rs.36,100

P= Bike present value= ₹ 40,000
R= -5 p.c.p.a ( since the rate is depreciating)
A = value after two years
$=P(1+\frac{r}{100}{)}^n$
$=40,000(1+\frac{-5}{100}{)}^2$
$=40,000(\frac{95}{100}{)}^2$
$=40,000\times \frac{95}{100}\times \frac{95}{100}$
$=₹36,100$
The value of bike after two years = ₹ 36,100