The value of a machine depreciates at a rate of 10% every year. It was purchased 3 years ago. If its present value is Rs. 8748, its purchase price was :a.14000b.12000c.10000d.16000
Question
The value of a machine depreciates at a rate of 10% every year. It was purchased 3 years ago. If its present value is Rs. 8748, its purchase price was :a.14000b.12000c.10000d.16000
Solution
The value of the machine depreciates at a rate of 10% every year. This means that every year, the value of the machine is 90% of its value the previous year.
Given that the present value of the machine is Rs. 8748 after 3 years, we can calculate the original price by reversing the depreciation process.
Step 1: After the first year, the value of the machine would have been 8748 / 0.9 = Rs. 9720.
Step 2: After the second year, the value of the machine would have been 9720 / 0.9 = Rs. 10800.
Step 3: After the third year (which is when the machine was purchased), the value of the machine would have been 10800 / 0.9 = Rs. 12000.
So, the machine was purchased for Rs. 12000. Therefore, the correct answer is (b) 12000.
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