Question

Depreciation applicable to an equipment is 20%. By how much per cent, will the value of the equipment 3 years from now be less than the present value ?

• A. 60%
• B. 54%
• C. 50.8%
• D. 48.8%

Answer 1

The correct option is D 48.8%

Let the present value of the equipment be $x$.
Then, value of the equipment three years from now $=x{(1-\frac{20}{100})}^3=x\times {\left(\frac{4}{5}\right)}^3=\frac{64x}{125}$
$\therefore$ Required percentage $=\frac{(x-\frac{64x}{125})}{x}\times 100=\frac{\left(\frac{125x-64x}{125}\right)}{x}\times 100$
$=\frac{61}{125}\times 100=48.8\%$