Total price reduce after 2 years = 60% of purchase price = 60% of 8000
= 4800 $

Market value after 2 years = 8000 - 4800
= 3200 $

Option C

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MV decreased by 30% each year so per year decrease ; in two years net decrease 60%;
8000*.4 ; 3200
IMO C

Hi,
if we do like this. Answer is different.
MV for first year = 8000*0.7 = 5600
MV for second year = 5600*0.7 = 3920

Can you please explain why?

Thanks

Each year, the constant amount of the decrease in the machine’s market value will be:

8,000 x 0.3 = $2,400

Therefore, its value after two years will be:

8,000 - 2 * 2,400 = $3,200

Answer: C
_________________

WELL The question seems a bit awkward in the sense:

When a product price decreases in two years then it decrease relative to its preceding year. Here the question focus on " the market value decreased by 30% of its purchase price . So basically it decrease by 60% in two years if the base is same.

hence 40% of 8000 = 3200 is the answer,

Many guys are asking why its not 3920. Remember here, the question is not saying that its a successive decrease of the preceding year
Meaning
8000-----(-30%)------ Y -----(-30%) -------Z .. This is not the case here..

The case is
8000------(-30%) 1st year
8000-----(-30%) 2nd year..

Hope it helps
_________________

Purchase price = 1982 market value = $8000
1983 market value = 8000 - 30%*8000
1984 market value = 8000 - 30%*8000 - 30%*8000
= 8000(1 - 0.3 - 0.3)
= 8000(0.4)
= 3200
= (C)

Purchase Price = 8000$

Decrease every year of it's purchase price = 2400$ = 0.3*8000

The value decreased after 2 years will be 4800$. The actual value will be 8000-4800 = 3200$

Answer C
_________________

Question says price decrease each year 30 % of its purchase value 8000
1st year decrease .7*8000:5600
Net price decrease is 8000-5600:2400
So in 2 years price decrease is 2400*2 : 4800
Price would be 8000-4800: 3200

Also note this price decrease 4800 is 4800/8000:60% decrease
@bv8562

The market value of a certain machine decreased by 30 percent of its purchase price each year. If the machine was purchased in 1982 for its market value of $8,000, what was its market value two years later?

(A) $8,000
(B) $5,600
(C) $3,200
(D) $2,400
(E) $800[/quote]

MV decreased by 30% each year so per year decrease ; in two years net decrease 60%;
8000*.4 ; 3200
IMO C[/quote]

Hi,
if we do like this. Answer is different.
MV for first year = 8000*0.7 = 5600
MV for second year = 5600*0.7 = 3920

Can you please explain why?

Because the value of the Machine is decreased by 30% OF ITS PURCHASE PRICE EACH YEAR i.e

30% of 8000 = 2400
Therefore, each year it is decreased by 2400

so, 8000-2*2400 = 3200 (C)

If the question had stated that each year its value is decreased by 30%. In that case 3920 would have been the answer.

Thanks[/quote][/quote]

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