Question

The value of a machine depreciates at the rate of $10\%$ per annum. What will be its value 2 years hence, if the present value is Rs. 100000? Also, find the total depreciation during this period.

Answer 1

Present value of machine = Rs. 100000
Rate of depreciation $=10\%$ p.a
Period (n) = 2 years
$\therefore$ Value of machine after 2 years
$=Rs.100000{(1-\frac{10}{100})}^2$
$=Rs.100000\times {\left(\frac{9}{10}\right)}^2$
$=Rs.100000\times \frac{9}{10}\times \frac{9}{10}=Rs.81000$
and depreciation = Rs. 100000 - 81000
= 19000