Question

The price of a car depreciates by 2% of its value at the beginning of each year. Find the sale value of thecar after 2years, if the present sale value is ₹500000.

Answer 1

Solution

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It is given that 

Present value = 500000

Reduced value = 364500

Rate of depreciation = 10% p.a.

Consider n years as the period 

We know that 

A/P = (1−r/100)n

Substituting the values 

364500/500000=(1−10/100)n

By further calculation 

(9/10)n=729/1000=(9/10)3

So we get 

n=3 

Therefore, the period in which its value be reduced to 364500 is 3 years.

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