The depreciation of the price of a car over three successive years is 10%, 15% and 25% respectively. If the original cost of the car was ₹5,80,000, then what was its value 3 years after purchase?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹3,32,775
Each year's depreciation is reckoned on the value at the start of that year, so the value is multiplied by (100 − rate)% once for every year; the three rates are not just added together.
After year 1 (10% off, so 90% left): \(580000\times0.90=522000\)
After year 2 (15% off, so 85% left): \(522000\times0.85=443700\)
After year 3 (25% off, so 75% left): \(443700\times0.75=332775\)
The value after 3 years is ₹3,32,775.