Question

The cost of Maruti 800 in the year 1998 was ₹ 2,50,000. After the end of one year and four months, the price underwent depreciation by 10% per annum. Its new price is

• A. Rs. 2,25,000
• B. Rs. 2,17,500
• C. Rs. 2,40,000
• D. Rs. 2,23,000

Answer 1

The correct option is B

Rs. 2,17,500

Depreciation means a decrease in the value due to use and age of the item.

$A=P\times {[1-\frac{r}{100}]}^n$, where $A$ is the amount, $P$ is the principal, $r$ is the rate of interest and $n$ is the time period.

So, price at the end of one year $=2,50,000\times {[1-\frac{10}{100}]}^1$= ₹ 2,25,000

Depreciation for next four months $=2,25,000\times 10\times \frac{1}{100\times 3}$ = ₹ 7500

So, the depreciated value after one year and four months $=2,25,000-7,500$ = ₹ 2,17,500