Question

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A manufacturer reckons that the value of a machine which costs him Rs.31250 will depreciates each year by 20%. Find the estimated value at the end of five years.

Answer 1

Step-by-step explanation:

First Year:

Principal cost       Rs 31250

Depreciation         20%  ( 31250*20%= 6250)

Value ( after depreciation) Rs 25000 ( 31250-6250)

Second Year:

Principal cost       Rs 25000

Depreciation         20%  ( 25000*20%= 5000)

Value ( after depreciation) Rs 20000 ( 25000-5000)

Third Year:

Principal cost       Rs 20000

Depreciation         20%  ( 20000*20%= 4000)

Value ( after depreciation) Rs 16000 ( 20000-4000)

Fourth Year:

Principal cost       Rs 16000

Depreciation         20%  ( 16000*20%=3200)

Value ( after depreciation) Rs 12800 ( 16000-3200)

Fifth Year:

Principal cost       Rs 12800

Depreciation         20%  ( 12800*20%= 2560)

Value ( after depreciation) Rs 10240 ( 12800-2560)

Estimated value at the end of five years : Rs 10240