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Question

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?

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Solution

Let the initial value of the machine, P be Rs x.Rate of depreciation, R= 10%Time, n = 3 yearsThe present value of the machine is Rs 291600.Then the initial value of the machine is given byValue = P×1-R100n=Rs. x×1-101003=Rs. x×100-101003=Rs. x×901003=Rs. x×9103 Present value of the machine = Rs 291600Now, Rs 291600 = Rs x×910×910×910x = Rs 291600×10×10×109×9×9x =Rs 291600000729x = Rs 400000 The initial value of the machine is Rs 400000.

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