Q4 of 13 Page 93

The cost price of a machine is 2,50,000. If the rate of depreciation is 10% per year find the depreciation in price of the machine after two years.

Principal = 250000/-, Rate (decrement) = 10% (p.c.p.a), Duration (n) = 2 years



2


2


A = 250000 (1-0.1)2


A = 250000 (0.9)2


A = 250000 (0.81)


∴A= 202500/-


∵ C.I. = A - P


∴ Depreciation in Price (C.I.) = 202500 – 250000


Depreciation in Price (C.I.) = -47500/-


(-) sign denotes the depreciation in amount.


∴ Depreciation in Price of the machine after 2 years will be 47500/- .


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