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Question
The cost of a machine is ₹ 18000 and it depreciates at `16 2/3 %` annually. Its value after 2 years will be ___________
Options
₹ 12000
₹ 12500
₹ 15000
₹ 16500
Solution
₹ 12500
Explanation;
Hint:
Cost of machine = 18000
Depreciation rate = `16 2/3 % = 50/3 %` p.a
Time period = 2 years
∴ As per depreciation formula,
Depriciated value = Original value `(1 - "r"/100)^"n"`
Substituting in above formula, we get
Depreciated value after 2 years
= `18000(1 - (50/3)/100)^2`
= `18000(1 - 50/(100 xx 3))^2`
= `18000(1 - 1/6)^2`
= `1800 xx (5/6)^2`
= `18000 xx 5/6 xx 5/6`
= ₹ 12,500
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