Multiple choice

Which of the following statements is/are true? Statement 1: The value of a car depreciates at the rate of 10% per year. A car which was bought three years ago is now worth Rs. 4,73,850. Its original price was Rs. 6,50,000. Statement 2: In fixed deposit, a bank gives 10% interest compounded annually for senior citizens. In 6 years, it will double a sum of money.

  1. Only Statement 1

  2. Only Statement 2

  3. Both Statement 1 and Statement 2

  4. Neither Statement 1 nor Statement 2
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

For Statement 1, the depreciated value is 650000 * (0.9)^3 = 650000 * 0.729 = 473850. This is correct. For Statement 2, using the rule of 72, 72/10 = 7.2 years, so it will not double in 6 years.

AI explanation

For Statement 1, using the depreciation formula, the present value equals the original price multiplied by the quantity (1 minus Rate divided by 100) raised to the power of time. Substituting the values gives 650000 multiplied by the cube of 0.90, which equals 650000 multiplied by 0.729, resulting in Rs. 4,73,850, making Statement 1 true. For Statement 2, at 10% annual compound interest, a sum becomes 1.1 raised to the power of 6, which is approximately 1.7728 times the original amount, not double, making Statement 2 false. Only Statement 1 is true.

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