Question

By using the formula, find the amount and compound interest on:

The value of a machine depreciates at the rate of $10\%$ per annum. It was purchased 3 years ago. If its present value is Rs 291600. for how much was it purchased ?

Answer 1

$\text{Rate of depreciation (R)}=10\%p.a.\text{Period (n) = 3 years}\text{Present value (A) = Rs. 291600}\therefore \text{Value of machine 3 years ago}\left(P\right)=A÷{(1-\frac{R}{100})}^n=Rs.291600÷{(1-\frac{10}{100})}^3=Rs.291600÷{\left(\frac{9}{10}\right)}^3=Rs.291600\times \frac{10}{9}\times \frac{10}{9}\times \frac{10}{9}=Rs.400000$