Target Exam

CUET

Subject

-- Applied Mathematics - Section B2

Chapter

Financial Mathematics

Question:

An average useful life of a truck is 10 years, with final scrap value of Rs. 50,000. If the annual depreciation of the truck is Rs. 1,25,000, then the original cost of the truck is:

Options:

Rs. 75,000

Rs. 1,75,000

Rs. 6,25,000

Rs. 13,00,000

Correct Answer:

Rs. 13,00,000

Explanation:

The correct answer is Option (4) → Rs. 13,00,000

$\text{Annual depreciation} = \frac{\text{Cost} - \text{Scrap}}{\text{Life}}$

$125000 = \frac{C - 50000}{10}$

$C - 50000 = 125000 \times 10 = 1250000$

$C = 1250000 + 50000 = 1300000$

The original cost of the truck is ₹13,00,000.