Question

A machine costing Rs.80,000 would reduce to Rs.20,000 in 8 years. Find the rate of yearly depreciation, given that the depreciation is calculated using diminishing balances method.

Answer 1

Answer:

rate of yearly depreciation is 15.91 %

Step-by-step explanation:

given data

machine cost = Rs 80000

reduce = Rs 20000

time t = 8 year

to find out

rate of yearly depreciation

solution

we will apply here rate of yearly depreciation formula that is

rate of yearly depreciation = 1 - $\frac{reduce}{cost} ^{1/t}$ × 100     ..............1

put here all these value we get rate of yearly depreciation

rate of yearly depreciation = 1 - $\frac{reduce}{cost} ^{1/t}$ × 100

rate of yearly depreciation = 1 - $\frac{20000}{80000} ^{1/8}$ × 100

rate of yearly depreciation = 15.91 %

so rate of yearly depreciation is 15.91 %