The value of a machine worth ₹ 500000.

The value of a machine worth ₹ 500000 is depreciating at the rate of 10% every year. In how many years will its value be reduced to ₹ 364500?

Solution:

It is given that
Present value = ₹ 500000
Reduced value = ₹ 364500
Rate of depreciation = 10% p.a.
Consider n years as the period
We know that
A/P = (1 – r/100)ⁿ
Substituting the values
364500/500000 = (1 – 10/100)ⁿ
By further calculation
(9/10)ⁿ = 729/1000 = (9/10)³
So we get
n = 3
Therefore, the period in which its value be reduced to ₹ 364500 is 3 years.

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