Question

The value of a property decreases every year at the rate of 5%. If its present value is 411540, what was its value three years ago?

Answer 1

It is given that
Present value of property = 411540
Rate of decrease = 5% p.a.
We know that
Value of property 3 years ago = $$A \div (1 - r/100)^{n}$$
Substituting the values
=$$ 411540 \div (1 - 5/100)^{3}$$
By further calculation
= $$411540 \div (19/20)^{3}$$
So we get
= $$411540 \times 20/19 \times 20/19 \times 20/19$$
= 480000