A scooter is bought at Rs. 56000. Its value depreciates at the rate of 10% per annum. What will be its value after 3 years?
Present value of scooter, P = Rs.56000
Time, n = 3 years
Rate of depreciates, R = 10% per annum
Now,
Amount (A) = P (1 + R/100)n [Where, A = Amount with compound interest
P = Present value
R = Annual interest rate
n = Time in years]
∴ Value = P (1 - R/100)n [∵ Rate decreases]
= 56000 (1 - 10/100)3
= 56000 (1 - 1/10)3
= 56000 (9/10)3
= 56000 × 729/1000
= 56 × 729
= 40824
∴ Value of scooter after 3 years will be Rs.40824.