Target Exam

CUET

Subject

-- Applied Mathematics - Section B2

Chapter

Financial Mathematics

Question:

The cost of a washing depreciates by ₹900 during the second year and by ₹ 810 during the third year. Then the original cost of the machine is

Options:

₹7000

₹5000

₹10000

₹6000

Correct Answer:

₹10000

Explanation:

$\text{Depreciation follows the reducing balance method.}$

$\text{Rate of depreciation }=r.$

$\frac{810}{900}=0.9 \Rightarrow 1-r=0.9 \Rightarrow r=10\%.$

$\text{Depreciation in 2nd year}=0.1\times(\text{value after 1st year})=900.$

$\text{Value after 1st year}=0.9C.$

$0.1\times0.9C=900.$

$0.09C=900.$

$C=10000.$

$\text{Original cost of the machine}=₹10,000.$