Question 112

The value of a machine depreciates every year by 10%. If its present value is 50,000 then the value of the machine after 2 years is

Solution

We know that value after n years of depreciation = P$$(1- \frac{R}{100})^n$$

R - Rate of depreciation per annum = 10%

P - Initial amount of machine = Rs 50000

given that time (n)= 2 years

so depreciated value = 50000$$(1- \frac{10}{100})^2$$ = 50000 x 0.81 = Rs 40500

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