The value of a car depreciates every year by 10%. What will be its value after 3 years if its present value is ₹6,25,000?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹4,55,625
Depreciation of 10% a year is worked out on the value at the start of each year, so every year the value becomes 90% (0.9 times) of what it was; after 3 years it is \(625000\times0.9^3\).
After 1 year: \(625000\times0.9=562500\)
After 2 years: \(562500\times0.9=506250\)
After 3 years: \(506250\times0.9=455625\), that is, ₹4,55,625