Theory question 101
Commercial ArithmeticA used car was purchased at N900,000.00. Its value depreciated by 30% in the first year. In each subsequent year, the depreciation was 22% of its value at the beginning of that year. If the car was bought on 1st March, 2011, calculate, correct to the nearest hundred naira, the value of the car on 28th February, 2015.
Show the model answer
Model answer
1 March 2011 to 28 February 2015 is 4 years.
After year 1: 900 000 × 0.70 = N630,000
After 3 more years: 630 000 × 0.78³ = 630 000 × 0.474552 = N298,967.76
Value ≈ N299,000 (nearest hundred naira)
Explanation
Count the years carefully: the fourth year ends on 28th February 2015.