Question

Tick (✓) the correct answer:
The value of a machine depreciates at the rate of 20% per annum. It was purchased 2 years ago. If its present value is Rs 40000, for how much was it purchased?
(a) Rs 56000
(b) Rs 62500
(c) Rs 65200
(d) Rs 56500

Answer 1

(b) Rs. 62500

$$\begin{gathered} \mathrm{Here},A=P\times {\left(1-\frac{R}{100}\right)}^n \\ =P\times {\left(1-\frac{20}{100}\right)}^2 \\ =P\times {\left(\frac{80}{100}\right)}^2 \\ =P\times \left(\frac{4}{5}\right)\times \left(\frac{4}{5}\right) \\ \Rightarrow 40000=\frac{16P}{25} \\ \therefore P=\frac{40000\times 25}{16}=\mathrm{Rs}62500 \end{gathered}$$