Simple PS

[karthikpandian19]

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

I have doubt in the answer choices. I think the answer should be 3920$ but it says 3200$. I am not sure where i miss the "catch"

[shankar.ashwin]

30% of purchase price = 3/10 * 8000 = 2400

after 2 years, price becomes 8000 - 2(2400) = 3200.

notice the wordings 'decreased by 30 percent of its purchase price' but doesn't sound like a GMAT problem.

[ankush123251]

Hi,
You got 3920 because you took 30 % of the value after 1 year which is not correct as the problem says
'decreased by 30 percent of its purchase price each year ' which means its initial purchase price.
So,
Price becomes 8000 - 2(2400) = 3200.