The value of a washing machine purchased two years ago depreciation at the annual rate of 10%. If its present value of ₹50,000, then its value after two years will be :
Answer & explanation
Correct answer: option 3
Let the present value of the washing machine be ₹50,000.
Rate of depreciation $=10\%$ per annum.
Value after $n$ years under depreciation:
$V=P(1-r)^n$
Here $P=50000,\; r=0.10,\; n=2$.
$V=50000(1-0.10)^2$
$V=50000(0.9)^2$
$V=50000\times0.81$
$V=40500$
final answer: ₹40,500