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Formula for CI

Original Cost...

Question

Original Cost = Rs $1, 00, 000$ . Life = $5$ years. Expected salvage value = Rs $2, 000$ . What will be the rate of depreciation p.a?

A

20.0 %

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B

19.8 %

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C

19.6 %

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D

19.4 %

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Solution

The correct option is C $19.6 %$
Depreciation = $\frac{1, 00, 000 - 2, 000}{5} = 19, 600$ ;
Rate of depreciation = $\frac{19, 600 \times 100}{1, 00, 000} = 19.6 %$

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