Question

A piece of equipment costs a certain factory is 10,00,000. If its value depreciates by 2% of original cost constantly at the end of every year, then its value at the end of 9 years will be

Answer 1

Answer:

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Answer 2

Answer:

The percentages of depreciation at the end of 1st,2nd,3rd years are 15%, 13.5%, 12%...., which are in A.P., with a =15% and d = -1.5%.

Hence, percentage of depreciation in the tenth year = a + (10-1) d = 15% + 9 (-1.5%) = 1.5%

Also, total value depreciated in 10 years = 15% + 13.5% + 12% + ... + 1.5% = 82.5%

Hence, the value of equipment at the end of 10 years=100% - 82.5% = 17.5%.

The total cost at the end of 10 years =  Rs. = Rs. 1,05,000.