Question

Tick the correct answer in each of the following:

The value of a machine depreciates at the rate of $10\%$ per annum. It was purchased 3 years ago for Rs 60000. What is the present value of the machine ?

(a) Rs 53640 (b) Rs 51680 (c) Rs 43740 (d) Rs 43470

Answer 1

$\text{3 years ago, the value of machine}=\text{Rs. 60000}\text{Rate of depreciation (R) =}10\%\text{Period (n) = 3 years}\therefore \text{Present value = P}{(1-\frac{R}{100})}^n=60000{(1-\frac{10}{100})}^3=Rs.60000\times {\left(\frac{9}{10}\right)}^3=Rs.60000\times \frac{9}{10}\times \frac{9}{10}\times \frac{9}{10}=Rs.43740\left(c\right)$