Afzal purchased an old motorbike for ₹ 16000. If the value of the motorbike after 2 years is ₹ 14440, find the rate of depreciation.
Solution:
It is given that
CP of an old motorbike = ₹ 16000
Price after 2 years = ₹ 14440
Consider r% as the rate of depreciation
We know that
A/P = (1 – r/100)n
Substituting the values
14440/16000 = (1 – r/100)2
By further calculation
361/400 = (1 – r/100)2
(19/20)2 = (1 – r/100)2
So we get
19/20 = 1 – r/100
r/100 = 1 – 19/20 = (20 – 19)/ 20 = 1/20
By cross multiplication
r = 100/20 = 5
Hence, the rate of depreciation is 5%.
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