Depreciation – Successive annual reduction: An LCD TV costing ₹ 1,00,000 depreciates at 10% per annum. What will be its value after 3 years (annual depreciation compounded)?

Introduction / Context:Depreciation at a fixed percentage each year mirrors compound decrease. Each year’s value is multiplied by (1 − d), where d is the depreciation rate.

Given Data / Assumptions:

• Initial value = ₹ 1,00,000
• d = 10% per annum
• t = 3 years

Concept / Approach:Value after t years: V = 100000 * (0.90)^t.

Step-by-Step Solution:V = 100000 * (0.9)^3= 100000 * 0.729 = ₹ 72,900

Verification / Alternative check:Year-wise: 100000 → 90000 → 81000 → 72900.

Why Other Options Are Wrong:₹ 80,000/₹ 90,000 imply single-year reductions; ₹ 85,000 is not a valid 3-year compounding outcome at 10%.

Common Pitfalls:Subtracting 10% of the original each year instead of 10% of the current value.

Final Answer:₹ 72900