Shortcut Trick
A depreciation of 2% means the new value becomes 98% (or 49/50) of the previous year's value.
Present Value = Initial Value × Multiplying Factor2
⇒ Present Value = 362500 × (49 / 50) × (49 / 50)
⇒ Present Value = 145 × 2401 = 348145
∴ The correct answer is ₹348145.
Alternate Method
Given:
Value of the car 2 years ago (P) = ₹3,62,500
Rate of depreciation (R) = 2% per annum
Time (T) = 2 years
Formula Used:
Present Value = P × (1 − R / 100)T
2 Years Ago
₹3,62,500
1 Year Ago
₹3,55,250
Present Value
?
−2%
−2%
Successive Depreciation over 2 years
Calculation:
⇒ Present Value = 362500 × (1 − 2 / 100)2
⇒ Present Value = 362500 × (98 / 100)2
⇒ Present Value = 362500 × (49 / 50) × (49 / 50)
⇒ Present Value = 362500 × 2401 / 2500
⇒ Present Value = 145 × 2401
⇒ Present Value = 348145
∴ The correct answer is ₹348145.
Additional Information
Depreciation Formula
When the value of an asset decreases uniformly by R% every year, the final value after T years is found using A = P × (1 − R/100)T.
Successive Percentage Change
The effective net change of two successive percentage changes a% and b% is given by [a + b + (a × b) / 100]%. For two 2% depreciations, the net change is −2 − 2 + (4/100) = −3.96%.
Population Growth
If a value (like a town's population) increases at R% per annum, the new amount after T years follows the standard compound interest formula: A = P × (1 + R/100)T.