Question

A refrigerator was purchased one year ago for Rs. 20,000/-. Its value depreciates at the rate of 15% per annum. Find its present value and its value after one year.
A. 17,000; 14,550
B. 16,000; 14,000
C. 17,000; 14,450
D. None of these

Answer 1

Hint: Find the value of the refrigerator one year after it’s purchase which is the present year and secondly, find the value of the refrigerator one year later which means value after two years. The present value will be the cost price to find the value of the refrigerator after two years.

Complete step by step solution:
We have been given the value of the refrigerator when it was first purchased which is Rs. 20,000 and we have the rate of depreciation per annum which is 15%.
Firstly, we have to calculate the present value of the refrigerator by calculating the depreciation amount per year and subtracting it by the original cost price.
$\dfrac{15}{100}\times 20,000=3,000$
The above value is the depreciation value of the fridge per year. Now, find the present value by subtracting the depreciation value from the original cost price of the refrigerator.
20,000 – 3,000 = 17,000
Therefore, we have the present value of the refrigerator after one year of the purchase.
In the next sub-question, we have been asked to find the value of the refrigerator after one more year which means we have to find the value of the refrigerator after two years. Similarly, we will find the value of the refrigerator after two years but we need to keep in mind that the depreciation percent will remain the same but the cost price considered will change to Rs. 17,000.
Let us evaluate the value of the refrigerator after two years.
$\dfrac{15}{100}\times 17,000=2,550$
After subtracting from Rs. 17,000/- we will get the value of the refrigerator after two years.
17,000 – 2,550 = 14,550
Hence the values of the refrigerator after one year and two years are Rs. 17,000 and Rs. 14,550 respectively.
17,000; 14,550

Note: In this question, we can often make a mistake in considering the cost price of the refrigerator to evaluate the value of the refrigerator after two years which often gets the wrong answer. Always remember to put the units for the calculated value to avoid cancellation of marks.