The value of a machine depreciates at the rate of 10% per annum.

Question:

The value of a machine depreciates at the rate of 10% per annum. What will be its value 2 years hence, if the present value is Rs 100000? Also, find the total depreciation during this period.

Solution:

Value of the machine after two years $=\mathrm{P}\left(1-\frac{\mathrm{R}}{100}\right)^{\mathrm{n}}$

$\Rightarrow 100,000\left(1-\frac{10}{100}\right)^{2}$

$=100,000(0.90)^{2}$

$=81,000$

Thus, the value of the machine after two years will be Rs 81,000 .

Depreciation $=$ Rs $100,000-$ Rs 81,000

$=\operatorname{Rs} 19,000$

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