Question

The value of a machine depreciates at the rate of 10%, 12% and 15% at the end of the first year, second year and third year on its value of the beginning of that year. If the present value of the machine is Rs. 5800, what will be its value at the end of 3 years, nearest to the whole rupee?
1. Rs. 4135
2. Rs. 3905
3. Rs. 4025
4. Rs. 3654

Answer 1

Correct Answer - Option 2 : Rs. 3905

Given:

The present value of the machine is Rs. 5800

1^st year depreciate value = 10%

2^nd year depreciate value = 12%

3^rd year depreciate value = 15%

Formula used:

Decreased value = Initial value × (100 - decrease%)/100

Calculation:

Value of machine after 1 year

5800 × 90/100 = Rs. 5220

Value of machine after 2 year

5220 × 88/100 = Rs.4593.6

Value of machine after 3 year

4593.6 × 85/100 = Rs. 3904.56 ≈ Rs. 3905

∴ The value of the machine after 3 years is Rs. 3905