Question

A scooter is bought for ₹ 31,250. If its value after 2 years is ₹ 24,200, find its rate of depreciation.

Answer 1

Given:

Present value = ₹ 24200

Time, n = 2

Value of the equipment 2 years ago = ₹ 31250

Present value = Value of an article n years ago `(1 - r/100)^n`, where r is the rate of depreciation and n is the number of years.

∴ `31250(1 - r/100)^2 = 24200`

⇒ `(1 - r/100)^2 = 24200/31250`

⇒ `(1 - r/100)^2 = 484/625`

⇒ `1 - r/100 = sqrt(484/625)`

⇒ `- r/100 = 22/25 - 1`

⇒ `- r = ((22 - 25)/25) xx 100`

⇒ `- r = - 12`

⇒ `r = 12`

Hence, the rate of depreciation is 12%.