A car bought for Rs. 625,000 is worth Rs. 400,000 after 2 years. At what annual rate has it depreciated on its reducing value?
Correct answer B. 20%
Explanation
(1 − R/100)² = 400000/625000 = 0.64, so 1 − R/100 = 0.8 and R = 20% per annum. Check: 625000 × 0.8 = 500000 and 500000 × 0.8 = 400000.
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