The price of an article increases by 5% every year. If the difference between its price at the end of the second and the third year is Rs.52.50, then what will be its price in the first year?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is Option 2 i.e. Rs 1,000.
Let's assume the price of the article is Rs 100x.
After 5% increase,
1st year price = 100 × (105/100) = 105x
2nd year price = 105 × (105/100) = 110.25x
3rd year price = 110.25 × (105/100) = 115.7625x
We have given in the question, the difference between its price at the end of the second and the third year is Rs.52.50.
So,
115.7625x - 110.25x = 52.50
5.5125x = 52.50
x = 9.52
So, the price of the article after 1st year = 105x = 105 × 9.52 = Rs 1000