Question

The present value of some equipment in a firm is ₹ 1,09,350. If the rate of depreciation is 10% p.a., how many years ago was its value ₹ 1,50,000?

Answer 1

Given:

Present value = ₹ 109350

Rate of depreciation = 10% p.a.

Value of the equipment n years ago = ₹ 150000

Present value = Value of an article n years ago `(1 - r/100)^n`, where r is the rate of depreciation and n is the number of years.

∴ `150000(1 - 10/100)^n = 109350`

⇒ `(9/10)^n = 729/1000`

⇒ `(9/10)^n = (9/10)^3`

⇒ `n = 3`

Hence, the value of machine was ₹ 150000 three years ago.