a manufacture estimates that his machine depreciates by 15% of its value at the begning of the year. Find the orignal value (cost) of the machine, it depeiciates by Rs 5,355 during the second year.

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Solution

assume the original cost of machine is M

Depreciation during 1st year is 0.15M

Value at the beginning of 2nd year,
after deprecation during the first year = 0.85M

Depreciation during 2nd year is
0.15(0.85M) = 5355

Hence M=5355/(0.15 X 0.85) =Rs. 42000

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