Question

A car depreciates at the rate of 10 % every year. If the cost price of the car is ₹ 5,00,000, what will be the value of the car after 6 years?

Answer 1

The cost price of the car is ₹ 5,00,000.

∴ a = 5,00,000

The value of the car depreciates at the rate of 10 % every year.

∴ r = \(\frac{100−10}{100}=\frac{90}{100}\) = 0.9

The value of the car after 6 years = T₇

Now, T_n = ar^n-1

Putting n = 7; a = 5,00,000; r = 0.9,

∴ T₇ = 5,00,000 (0.9)^7-1

= 5,00,000(0.9)⁶

= 5,00,000(0.531441)

= 2.65,720.50

Hence, the value of the car after 6 years will be ₹ 2,65,720.50.