1. The market value of a certain machine decreased by 30 percent of its purchase price each year. If the machine was purchased in 1982 for its market value of $8,000, what was its market value two years later?
(A) $8,000
(B) $5,600
(C) $3,200
(D) $2,400
(E) $800
Answer: C
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Solution:
ReplyDeletePrice decreased every year = 30% of $8000 = $2400
Price after 2 years = $8000 - $2400 * 2 = $3200
I dont think this solution is correct.
ReplyDelete1st year reduction = $8000 * 0.3 = $2400
Market price = $8000 - $2400 = $5600
2nd year reduction = $5600 * 0.3 = $1680
Market price = $5600 - $1680 = $3920.
The same result can be obtained as follows as well:
Resultant market price = $8000 * 0.7 * 0.7
We are talking about reduction with respect to market price i.e. $8000. So every year reduction would be $2400.
ReplyDeleteThe market value of a certain machine decreased by 30 percent of its purchase price each year.
ReplyDeleteThis is an ambiguous statement.