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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.
Solution
Value of the machine after two years = P \[\left( 1 - \frac{R}{100} \right)^n \]
\[ \Rightarrow 100, 000 \left( 1 - \frac{10}{100} \right)^2 \]
\[ = 100, 000 \left( 0 . 90 \right)^2 \]
\[ = 81, 000\]
Thus, the value of the machine after two years will be Rs 81, 000.
Depreciation = Rs 100, 000 - Rs 81, 000
= Rs 19, 000
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