Q. 103.6( 8 Votes )

The value of a ma

Answer :

Let value of a machine 2 years ago, = P


Present value of machine = Rs.40000


Time, n = 2 years


Rate of depreciates, R = 20% per annum


Now,


Amount (A) = P (1 + R/100)n [Where, A = Amount with compound interest


P = Present value


R = Annual interest rate


n = Time in years]


Value = P (1 - R/100)n [ Rate decreases]


40000 = P (1 - 20/100)2


40000 = P (1 - 1/5)2


40000 = P (4/5)2


40000 = P × 16/25


P = 40000 × 25/16


P = 2500 × 25


P = 62500


Value of a machine 2 years ago is Rs.62500.

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