Two years ago, price of my motorbike was Rs.62500. If 4% depreciation occurs every year, then find its present value.
Answer & explanation
Correct answer: option 2
Price (2 years ago) × [1 - \(\frac{4}{100}\)] × [1 - \(\frac{4}{100}\)] = Present value
62500 × \(\frac{96}{100}\) × \(\frac{96}{100}\) = Present value
62500 × \(\frac{24}{25}\) × \(\frac{24}{25}\) = Present value
Present value = Rs.57600