Question

The value of a motorcycle depreciates every year by 4%. What will be its value after 2 years, if its present value is Rs. 75,000?
1. Rs. 69,120
2. Rs. 70,120
3. Rs. 69,000
4. Rs. 72,000

Answer 1

Correct Answer - Option 1 : Rs. 69,120

Given data:

Present value of motorcycle = Rs. 75,000

Rate of depreciation = 4%

Time for depreciation = 2 years

Concept used:

Final value = Initial value × [(100 – Rate of depreciation)/100]ⁿ

Where, n = no. of years

Calculation:

Final value = Initial value × [(100 – Rate of depreciation)/100]ⁿ

⇒ 75,000 × [(100 – 4)/100]²

⇒ 75,000 × (96/100)²

⇒ 75,000 × (24/25)²

⇒ (75,000 × 576)/625

⇒ 69,120

∴ The value of the motorcycle after 2 years will be Rs. 69,120.