A piece of equipment cost a certain factory Rs 600,000. If it depreciates in value, 15% the first, 13.5% the next year, 12% the third year, and so on. What will be its value at the end of 10 years, all percentages applying to the original cost?
Cost of the piece of equipment at the end of the first year = Rs 600000 – 15% of 600000
= Rs 600000 – Rs 90000
= Rs 510000
Cost of the piece of equipment at the end of the second year = Rs 600000 – 13.5% of 600000
= Rs 600000 – Rs 81000
= Rs 519000
Cost of the piece of equipment at the end of the third year = Rs 600000 – 12% of Rs 600000
= Rs 600000 – Rs 72000
= Rs 528000
The numbers 510000, 519000, 528000 are in an A.P. whose first term in 510000 and common difference is 9000.
∴ Cost of the piece of equipment at the end of 10 years = a + (10 – 1)d
= 510000 + 81000
= Rs 591000
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