A car costs KSh 1,200,000 and loses 10% of its value each year. What is its value after 2 years?
Answer and explanation
Correct answer: D. KSh 972,000
- Step 1: Value after year 1 = 0.9 x 1,200,000 = 1,080,000. Step 2. Value after year 2 = 0.9 x 1,080,000 = 972,000. Answer: KSh 972,000. Why not the others: KSh 960,000: That takes 20% off the original price, but the second 10% is worked on the reduced value. KSh 1,080,000: That is the value after only one year. KSh 1,320,000: That adds 10% instead of subtracting.
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