Question

If an automobiles depreciate in balues 5%every year at end of 4 years what is value of automobile purchased for Rs 12000/-?

Answer 1

Given info : an automobile purchased for 12,000 Rs, depreciates in values 5 % per year.

To find : at the end of of 4 years, the price of automobile.

solution : using formula,

FV = PV(1 - r/100)ⁿ

Where FV is final value, PV is principal value , r is rate of depreciation and n is time in years.

Here PV = 12,000 Rs. , r = 5% , n = 4

so, FV = 12000(1 - 5/100)⁴

= 12000(1 - 1/20)⁴

= 12000(19/20)⁴

= 12000 × 19⁴/160000

= 3 × 19 × 19 × 19 × 19/40

= 9774.075 Rs

Therefore price of automobile after 4 years will be 9774.075 Rs.