The value of a TV that was purchased in January 1999, depreciates at 12% p. a. If its value in January 2001 is Rs. 4840, then what was the purchase price of the TV?
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The purchase price of the TV is 6250 Rs.
Explanation:
Let P be the price of TV in January 1999, then the value of TV in January 2001, that is after two years.
Using the compound interest formula
A = P(1 - R/100)^2
4840 = P(1 - 12/100)^2
4840 = P(22/25)^2
P = 4840 x 25 x 25/22 x 22
P = 6250 Rs
Thus the purchase price of the TV is 6250 Rs.
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