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Question
The value of a car, bought for Rs 4,40,000 depreciates each year by 10% of its value at the beginning of that year. So its value becomes Rs 3,08,000 after three years.
Options
True
False
Solution
This statement is False.
Explanation:
The value of a car i.e. principal = Rs. 440000
Rate of depreciation (R%) = 10% per annum
Time period (T) = 3 yr
The value of the car after depreciation in 3 yr is given by
`A = P(1 - R/100)^T`
= `440000(1 - 10/100)^3`
= `440000 xx 9/10 xx 9/10 xx 9/10`
= 440 × 729
= Rs. 320760
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