Question

Initial cost of a machine is Rs 6,00,000, with other
details as below:
Year: 1 2 3 4 5
Resale (Rs) 4,20,000 3,00,000 2,04,000 1,44,000 96,500
value
Cost of (Rs) 40,000 42,700 48,800 57,000 68,000
spares
Cost of (Rs) 1,40,000 1,60,000 1,80,000 2,10,000 2,50,000
value
Determine optimum period of the replacement of the
machin

Answer 1

Answer:

rs. 2,21,184.

Step-by-step explanation:

formula for depreciated value =p(1 - r/100)^n

where p is the present cost,

r is depreciation rate,

n is number of years is the time.

so by using the formula we get

=2,50,000(1 - 4/100) ^3

=2,50,000(96/100)^3

=2,50,000*96*96*96/100*100*100

=rs. 2,21,184

so,the coast of the machine after 3 years at depreciation value of 4% is Rs. 2,21,184.