Question

The value of a car decreases annually by 20%. If the present value of the car be Rs 450000, what will be its value after 2 years?

Answer 1

The present value of the car = Rs 450000
The decrease in its value after the first year = 20% of Rs 450000
= Rs $\left(\frac{20}{100}\times 450000\right)$= Rs 90000
The depreciated value of the car after the first year = Rs (450000 − 90000) = Rs 360000
The decrease in its value after the second year = 20% of Rs 360000
= Rs $\left(\frac{20}{100}\times 360000\right)$ = Rs 72000
The depreciated value of the car after the second year = Rs (360000 − 72000) = Rs 288000

Hence, the value of the car after two years will be Rs 288000.