Question

The value of machine depreciates 8% annually.If the machinery purchased two years ago. And it's present value is Rs. 1,56,584. What was the purchase price?
1. Rs. 1,85,000
2. Rs. 1,57,000
3. Rs. 2,50,000
4. Rs. 1,60,000

Answer 1

Correct Answer - Option 1 : Rs. 1,85,000

Given

Depreciation rate = 8%

Time = 2 years

Present value of machine = Rs. 1,56,584

Formula used

P₁ = P_o (1 - r%)^t

Where P₁ and P₀ are present and original value respectively

Calculation

let the Purchase price is Rs.x

156584 = x × (92/100) × (92/100)

⇒ x = (156584 × 100 × 100)/(92 × 92)

⇒ x = 1,85,000

∴ Purchase price is Rs. 1,85,000