The value of a machine depreciated by 10% per year during the first two years and 15% during the third year. Express the total depreciation of the machine as percentage during the three years.
Answers
let Initial value of machine = 100 units
After first year
value of machine = 100 - ( 10% of 100) [ considering depreciation of 10%]
= 100 - 10 = 90 units
After second year
value of machine = 90 - ( 10% of 90) [ considering depreciation of 10%]
= 90 - 9 = 81 unit
After third year
value of machine = 81 - ( 15% of 81) [ considering depreciation of 15%]
= 81 - ( (15 × 81)/ 100 )
= 81 - 12.15 = 68.85
Total %
depreciation = (Initial value - value of machine after third year) ×100/Initial value
= (100 - 68.85) ×100/100
= 31.15%
hence Total % depreciation during three years = 31.15%