Question

The cost price of machine is $2,50,000$. If the rate of depreciation is $10\%$ per year. find the depreciation in price of the machine after two years.

Answer 1

The cost price of the machine, $P=Rs.250000$

The rate of depreciation, $R=10\%$

Time, $T=2$ years

Depreciated price of the machine (A) after 2 years is given by

$A=P[1-\frac{R}{100}{]}^T$

$=250000[1-\frac{10}{100}{]}^2$

$=25000(0.9{)}^2$

$=250000\times \frac{9}{10}\times \frac{9}{10}$

$=2500\times 81$

$=Rs.202500$

Depreciation in price = Cost price - Depreciated Price

$=P-A$

$=250000-202500=Rs.47500$