Question

The value of a machine depreciates every year at the rate of 10%. If the value after 3 years after it was purchased is ₹ 10,935, at what price was it purchased?

Answer 1

Given:

• Rate of depreciation, r = 10%
• Number of years, n = 3
• Value of an article after 3 years = ₹ 10935

Value of an article after n years = `P(1 - r/100)^n` where P is the original value at the time of buying, r is the rate of depreciation and n is the number of years.

∴ `P(1 - 10/100)^3 = 10935`

⇒ `P(9/10)^3 = 10935`

⇒ `P = (10935 xx 10 xx 10 xx 10)/(9 xx 9 xx 9)`

⇒ `P = 15000`

Hence, the value three years before was ₹ 15000.