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
Answer & explanation
Correct answer: option 3
$\text{Depreciation follows the reducing balance method.}$
$\text{Rate of depreciation }=r.$
$\frac{810}{900}=0.9 \Rightarrow 1-r=0.9 \Rightarrow r=10\%.$
$\text{Depreciation in 2nd year}=0.1\times(\text{value after 1st year})=900.$
$\text{Value after 1st year}=0.9C.$
$0.1\times0.9C=900.$
$0.09C=900.$
$C=10000.$
$\text{Original cost of the machine}=₹10,000.$