Question

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, its purchase price was

• A. 16000
• B. 12000
• C. 10000
• D. 8000
• E.

Hint:

For depreciation problems, use the formula: \[ \text{Present value} = P \times (1 - \frac{r}{100})^n. \] and solve for the initial purchase price.

Answer 1

The Correct Option is B

Let the purchase price be \( P \). The depreciation formula is: \[ P \times (1 - \frac{r}{100})^n = \text{Present value}. \] Here, \( r = 10\% \), \( n = 3 \), and the present value is Rs. 8748. Substituting into the formula: \[ P \times (1 - \frac{10}{100})^3 = 8748 \quad \Rightarrow \quad P \times (0.9)^3 = 8748. \] \[ P \times 0.729 = 8748 \quad \Rightarrow \quad P = \frac{8748}{0.729} = 12000. \]