The value of a machine depreciates at the rate of 10% every year. It was purchased 3 years ago. If its present value is Rs. 8,748, its purchase price was ?
Solution
Correct Answer: Option B
We have P = 8748, R = -10 and n = 3
Therefore, the purchase price of the machine
= \(\frac{\mathbf P}{\left(\mathbf1\boldsymbol+{\displaystyle\frac{\mathbf R}{\mathbf{100}}}\right)^\mathbf n}\) = \(\frac{\mathbf{8748}}{\left(\mathbf1\boldsymbol-\frac{\mathbf{10}}{\mathbf{100}}\right)^\mathbf3}\)
= 8748 x (100/90) x (100/90) x (100/90)
= 12,000.
Therefore, the purchase price of the machine was Rs. 12,000.
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