Question:
Tick (✓) the correct answer:
The value of a machine depreciates at the rate of 20% per annum. It was purchased 2 years ago. If its present value is Rs 40000, for how much was it purchased?
(a) Rs 56000
(b) Rs 62500
(c) Rs 65200
(d) Rs 56500
Solution:
(b) Rs. 62500
Here, $A=P \times\left(1-\frac{R}{100}\right)^{n}$
$=P \times\left(1-\frac{20}{100}\right)^{2}$
$=P \times\left(\frac{80}{100}\right)^{2}$
$=P \times\left(\frac{4}{5}\right) \times\left(\frac{4}{5}\right)$
$\Rightarrow 40000=\frac{16 P}{25}$
$\therefore P=\frac{40000 \times 25}{16}=$ Rs 62500