Question

The value of a machine depreciates every year by 5% p.a. If the present value is ₹ 4,11,540; what was its value 3 years ago?

Answer 1

Present value = ₹ 411540

Rate of depreciation, r = 5%

Number of years, n = 3

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.

∴ `x(1 - 5/100)^3 = 411540`

⇒ `x(19/20)^3 = 411540`

⇒ `x = (411540 xx 20 xx 20 xx 20)/(19 xx 19 xx 19)`

⇒ `x = 480000`

Hence, the value of machine three years ago is ₹ 480000.