Question

The value of a machine depreciates at the rate of 10% per annum. What will be its value 2 years hence, if the present value is Rs 100000? Also, find the total depreciation during this period.

Answer 1

Given details are,

Present value of machine is = Rs 100000

Rate of depreciation = 10% per annum

By using the formula,

A = P (1 + R/100)

= 100000 (1 – 10/100) (1 – 10/100)

= 100000 (90/100) (90/100)

= 100000 (0.9) (0.9)

= 81000

Value of machine after two years will be Rs 81000

∴ Total depreciation during this period is Rs (100000 – 81000) = Rs 19000