Question

a property decreases in value every year at the rate of 6 1/4% of its value at the beginning of the year its value at the end of 3 years was rs.21093. find its value at the beginning of the first year?

Answer 1

This is a question on depreciation.

The value at the end of n years for a value depreciating at the rate r is given by :

V(n) = P(1 - r)ⁿ

P =? The initial value

V (n) = 21093

n = 3

r = 6.25%

Doing the substitution we have :

21093 = P(1 - 0.0625)³

21093 = P(0.9375)³

21093 = 0.82397P

P = 21093/0.82397

P = 25599.23

= Rs 25599.23