The value of a machine depreciates at 20% per annum. If its present value is Rs. 1,50,000, at what price should it be sold after two years such that a profit of Rs. 24,000 is made?
Correct answer: B. Rs. 1,20,000
- A. Rs. 1,10,000
- B. Rs. 1,20,000
- C. Rs. 1,24,000
- D. Rs. 1,21,000
- E. None of these
Explanation
After one year the value is Rs. 150000 x 0.80 = Rs. 120000, and after two years it is Rs. 120000 x 0.80 = Rs. 96000. To make a profit of Rs. 24000, the selling price must be Rs. 96000 + Rs. 24000 = Rs. 120000. The likely wrong choice is Rs. 124000, which adds the profit to the present value and ignores two years of depreciation.
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About Profit and Loss
Profit and loss compare the cost price and selling price of an item, using profit or loss percentages based on the cost price unless stated otherwise. Questions include marked price, discount, successive discounts, commission, and finding an unknown price, with care needed to distinguish discount from loss.
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