A = present value
P = Value 3 years ago
R = Rate
n = No. of years = 3
13720 = P(1 - 12.5/100)^3
13720 = P(0.875)^3
13720 = 0.67P
P = 13720/0.67
P = 20480
The machine cost 20480 three years ago
The original value of the machine 3 years ago is Rs 20479.9962 .
As the decrease exponential function is given by
Where y is the final value , a is the initial value , r is the rate of interest in the decimal form and t is the time in the years .
The value of machine depreciates at 12.5% per annum . it was purchased 3 years ago. if its present value is 13720 .
y = 13720
12.5% is written in the decimal form
r = 0.125
t = 3 years
Put all the values in the formula
13720 = 0.669922a
a = Rs 20479.9962
Therefore the original value of the machine 3 years ago is Rs 20479.9962 .