Question

It is estimated that every year the value of a machine depreciates by $20$% of its value at the beginning of the year. Calculate the original valu of the machine, if its value after two year is $Rs.10,240$.

• A. $Rs.21,000$
• B. $Rs.19,000$
• C. $Rs.17,000$
• D. $Rs.16,000$

Answer 1

Answer: (D)

$Rs.16,000$

machine value after $2$ year=$Rs.10240$

Rate of depreciation$=20$%

Let the original value of the machine=$Rs.x$

Value after $2$ year=Present value${(1-\frac{R}{100})}^T$

$\Rightarrow 10240=x{(1-\frac{20}{100})}^2$

$\Rightarrow 10240=x\times \frac{80}{100}\times \frac{80}{100}$

$\Rightarrow x=\frac{10240\times 100\times 100}{80\times 80}=Rs.16000$