Answer:
1st year = RS 50,000
2nd year = RS 47,500
3rd year = RS 45,125
Explanation:
Given the cost of a car to be RS 1,000,000, if the car depreciates yearly by 5%, then the insurance premium paid which is the operating expenses eacg year will be calculated as thus;
In the first year;
insurance premium paid = 5% of RS 1,000,000
= 5/100 * 1,000,000
= RS50,000
cost of the car after the first year of usage = 1,000,000-50,000
= RS 950,000
In the second year;
Insurance premium paid in the second year = 5% of RS 950,000
= 5/100 * 950,000
= 5*9,500
= RS 47,500
cost of the car at the end of second year = 950,000-47,500 = RS 902,500
In the third year;
Insurance premium paid in the third year = 5% of RS 902,500
= 5/100 * 902,500
= 5*9,025
= RS 45,125