Depreciation applicable to an equipment is 20%. The value of the equipment 3 years from now will be less by :

A. 45%

B. 48.8%

C. 51.2%

D. 60%

Answer: Option B

Solution(By Examveda Team)

Let the present value be Rs. 100
Value after 3 years :
$$\eqalign{ & = {\text{Rs}}{\text{. }}\left[ {100 \times {{\left( {1 - \frac{{20}}{{100}}} \right)}^3}} \right] \cr & = {\text{Rs}}{\text{. }}\left( {100 \times \frac{4}{5} \times \frac{4}{5} \times \frac{4}{5}} \right) \cr & = {\text{Rs}}{\text{. 51}}{\text{.20}} \cr} $$
∴ Reduction in value :
= (100 - 51.20)%
= 48.8%