    Question

# A piece of equipment cost a certain factory Rs 600,000. If it depreciates in value, 15% the first, 13.5% the next year, 12% the third year, and so on. What will be its value at the end of 10 years, all percentages applying to the original cost?

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Solution

## Cost of the piece of equipment at the end of the first year = Rs 600000 – 15% of 600000 = Rs 600000 – Rs 90000 = Rs 510000 Cost of the piece of equipment at the end of the second year = Rs 600000 – 13.5% of 600000 = Rs 600000 – Rs 81000 = Rs 519000 Cost of the piece of equipment at the end of the third year = Rs 600000 – 12% of Rs 600000 = Rs 600000 – Rs 72000 = Rs 528000 The numbers 510000, 519000, 528000 are in an A.P. whose first term in 510000 and common difference is 9000. ∴ Cost of the piece of equipment at the end of 10 years = a + (10 – 1)d = 510000 + 81000 = Rs 591000  Suggest Corrections  0      Similar questions  Related Videos   GAAP and Basic Accounting Concepts
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