The cost of a bike depreciates at the rate of 5% per annum. If its present value is Rs. 60,000, then what will be its value after 2 years?
- AOption (a)
Rs. 55,500
- BOption (b)
Rs. 55,000
- COption (c)
Rs. 54,100
- DOption (d)
Rs. 54,150
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Correct answer
Rs. 54,150
Why this answer is correct
Formula used
Value of a commodity after 'n' years with depreciation rate 'r'% p.a. is
\(Actual\ value \times (1 - {r\over100})^n\)
Given:
Cost of Bike = Rs.60,000
Rate of depreciation = 5% p.a.
Calculation
The Value of the Bike after two years will be,
\(Actual\ value \times (1 - {r\over100})^n\)
\(⇒ 60000 \times (1 - {5\over100})^2\)
\(⇒ 60000 \times ({19\over20})^2\)
⇒ Rs. 54150
