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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. 8748, What is its purchase price?
  • a)
    11000
  • b)
    9000
  • c)
    10000
  • d)
    12000
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
The value of a machine depreciates at the rate of 10% every year. It ...
Given:
Depreciation rate = 10% per year
Present value = Rs. 8748
Years since purchase = 3

To find: Purchase price of the machine

Solution:
Let the purchase price of the machine be P.

After 1st year, the value of the machine = P - 10% of P
After 2nd year, the value of the machine = (P - 10% of P) - 10% of (P - 10% of P) = 0.9P - 0.09P = 0.81P
After 3rd year, the value of the machine = 0.81P - 10% of 0.81P = 0.729P

Given that the present value of the machine is Rs. 8748 after 3 years.
Therefore, 0.729P = 8748
P = 8748/0.729
P = Rs. 12000

Hence, the purchase price of the machine is Rs. 12000.
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Community Answer
The value of a machine depreciates at the rate of 10% every year. It ...
D is the correct answer
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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. 8748, What is its purchase price?a) 11000b) 9000c) 10000d) 12000Correct answer is option 'D'. Can you explain this answer?
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