Question 1
A used car was purchased at ₦900,000.00. Its value depreciated by 30% in the first year. In each subsequent year, the depreciation was 22% of its value at the beginning of that year. If the car was bought on 1st March, 2011, calculate, correct to the nearest hundred naira, the value of the car on 28th February, 2018.
Observation
The Chief Examiner reported that Candidates’ answered this question very well as various methods were correctly used. They did as expected by finding depreciation for 1st year as
= ₦270,000.00 and thereafter, finding the balance = ₦(900,000.00 – 270,000.00)
= ₦630,000.00. After which, for the subsequent year, the depreciation is calculated as thus:
Deprecation for 2nd year = = ₦138,600.00
Balance = ₦(630,000.00 – 138,600.00) = ₦491,400.00
Deprecation for 3rd year = = ₦108,108.00
Balance = ₦(491,400.00 – 108,108.00) = ₦383,292.00
Deprecation for 4th year = = ₦84,324.24
Balance = ₦(383,292.00 – 84,324.24) = ₦298,967.76
Value of car on 28th February, 2018 ₦299,000.00 correct to the nearest hundred naira.
Alternatively,
The value of car after 1st depreciation =
Value of car after 2nd depreciation = = ₦491,400.00.
Value of car after 3rd depreciation = = ₦383,292.00
Value of car after 4th depreciation = = ₦298,967.76
Value of car on 28th February, 2018 ₦299,000.00 correct to the nearest hundred naira.
However, most of the Candidates’ could not round up to the nearest hundred naira as required.