Question

# The cost of a machine depreciated by Rs. 4,000 during the first year and by Rs. 3,600 during the second year. Calculate its cost at the end of the third year

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Solution

## Difference between depreciation of 1st year and 2nd year=4000−3600=Rs.400⇒Depreciation of one year on Rs.4000=Rs.400⇒Rate of depreciation =400×1004000=10%Let the original cost of the machine be Rs100∴Value after one year=Rs.100−10%of100=100−10100×100=Rs.90Depreciation during second year=10% of 90=10100×90=Rs.9When depreciation during second year is Rs. 9 then original cost=Rs.100When Depreciation during the second year is Rs.3600 then original cost=1009×3600=Rs.40000 Cost of the machine after one year=40000−4000=Rs.36000Cost of the machine after second year=36000−3600=Rs.32400∴Depreciation in third year=10%of 32400=10100×32400=Rs.3240Cost of the machine after third year=32400−3240=Rs.29160

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