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# The market value of a certain machine decreased by 30

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Senior Manager
Joined: 19 Feb 2007
Posts: 325

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The market value of a certain machine decreased by 30 [#permalink]

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27 Jun 2007, 08:57
00:00

Difficulty:

(N/A)

Question Stats:

67% (00:56) correct 33% (00:00) wrong based on 7 sessions

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This topic is locked. If you want to discuss this question please re-post it in the respective forum.

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

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Senior Manager
Joined: 28 Feb 2007
Posts: 300

Kudos [?]: 44 [0], given: 0

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27 Jun 2007, 09:09
something is wrong with this question.

If the market value is X, then
after 1 year it is 0.7X
2 years later it must be 0.7X*0.7=0.49X

but there is no such answer.
maybe they took 8000 *(1-2*0.3)=3200

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Manager
Joined: 27 Jun 2007
Posts: 198

Kudos [?]: 54 [0], given: 0

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27 Jun 2007, 09:25
UMB wrote:
something is wrong with this question.

If the market value is X, then
after 1 year it is 0.7X
2 years later it must be 0.7X*0.7=0.49X

but there is no such answer.
maybe they took 8000 *(1-2*0.3)=3200

I think that the 3,200 is correct; there isn't anything wrong. The question states that "decreased by 30 percent of its purchase price each year," which to me, indicates a 30% drop in value per year of the machine.

Does it make sense to depreciate in that method? I don't think so, but the way the question is worded, I would go with 3,200.

Kudos [?]: 54 [0], given: 0

CEO
Joined: 21 Jan 2007
Posts: 2734

Kudos [?]: 1091 [2], given: 4

Location: New York City

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02 Oct 2007, 12:52
2
KUDOS
UMB wrote:
something is wrong with this question.

If the market value is X, then
after 1 year it is 0.7X
2 years later it must be 0.7X*0.7=0.49X

but there is no such answer.
maybe they took 8000 *(1-2*0.3)=3200

it is 30% of purchase price

not 30% of market value and the subsequent market value (year 2)

so it is .30 (8000) = 2400
x2 = 4800

8000 - 4800 = 3200

Kudos [?]: 1091 [2], given: 4

Non-Human User
Joined: 09 Sep 2013
Posts: 14782

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Re: The market value of a certain machine decreased by 30 [#permalink]

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14 Sep 2017, 13:08
Hello from the GMAT Club BumpBot!

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Re: The market value of a certain machine decreased by 30   [#permalink] 14 Sep 2017, 13:08
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