Question

# The cost of a machine is supposed to depreciate each year by 12% of its value at the beginning of the year. If the machine is valued at Rs. 44,000 at the beginning of 2008, find its value : (i) at the end of 2009. (ii) at the beginning of 2007.

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Solution

## I) The cost of machine depreciates at the beginning of next year, or we can say at the end of each year, so Value at the end of 2009 = Value at the beginning of 2010 So, Value at the beginning of 2008 = Rs 44000 Value at the beginning of 2009 = 88% of 44000 = 0.88 (44000) Value at the beginning of 2010 = 88% of 0.88 (44000) = 0.882×(44000) = 0.7744 (44000) = Rs 34073.6 ii) Let Value of machine at the beginning of 2007 be V, so Value of machine at the beginning of 2008 = 0.88 V 0.88 V = 44000 V = Rs 50000 Therefore, Value of machine at the beginning of 2007 was Rs 50000.

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