Question

A machine was purchased 2 years ago. Its value decreases by 10 % every year. Its present value is ₹ 97200. Find the purchase price of the machine

• A. ₹ 1,20,000
• B. ₹ 1,10,000
• C. ₹ 90,000
• D. 1,00,000

Answer 1

The correct option is A

₹ 1,20,000

Given Present value of the machine ₹ 97200, Rate = 10 % and n = 2 years
The present value of the machine = Value of the machine 2 years ago $(1-\frac{r}{100}{)}^2$

97200 = P $(1-\frac{10}{100}{)}^2$
97200 = P$(\frac{90}{100}{)}^2$
P = $\frac{97200\times 10\times 10}{9\times 9}$
= ₹ 120000