Question

Sonika bought land for ₹ 550000 the value of Land depreciates at the rate of 5% every six month. what is the value of land after 2 years?

Answer 1

We will simply apply the formula of Compound Interest here but instead of adding the rate we will subtract it as the value is to be depreciated.

Solution:

Principal ( P ) = ₹ 550000
Rate of depreciation ( R ) = 5 % / 6 months = 5% per half year
Time ( T ) = 2 years

We know,

Amount = P ( 1 - R / 200 ) ^ 2T
Value after 2 years = 550000 ( 1 - 5/200 ) ^ 4

Value after 2 years = 550000 ( 1 - 1/40 ) ^ 4
Value after 2 years = 550000 ( 39 / 40 ) ^ 4
Value after 2 years = 550000 * 39/40 * 39/40
Value after 2 years = 550000 * 1521 / 1600
Value after 2 years = 5500 * 1521 / 16
Value after 2 years = ₹ 5,22,843.75