Statistics & Applications

Financial Math

Medium

applied

A piece of machinery is bought for Rs. 50,000. In the first year, it depreciates by 15%, and in each subsequent year, the depreciation rate increases by 5% from the previous year. The value of machinery after 3 years will be:

Rs. 32,700

Rs. 24,000

Rs. 25,500

Rs. 42,000

✅ Correct Option: 3

Initial value of machinery: Rs. 50,000

Depreciation rate in Year 1: 15%

Depreciation rate increases by 5% each subsequent year.

Year 1 depreciation: 15%

Remaining value percentage: 100% - 15% = 85%

Value after Year 1:

$= 50,000 \times \dfrac{85}{100}$

$= 50,000 \times 0.85$

$= 42,500$

Year 2 depreciation: 15% + 5% = 20%

Remaining value percentage: 100% - 20% = 80%

Value after Year 2:

$= 42,500 \times \dfrac{80}{100}$

$= 42,500 \times 0.80$

$= 34,000$

Year 3 depreciation: 20% + 5% = 25%

Remaining value percentage: 100% - 25% = 75%

Value after Year 3:

$= 34,000 \times \dfrac{75}{100}$

$= 34,000 \times 0.75$

$= 25,500$

Alternatively, the value can be calculated directly:

Value after 3 years:

$= 50,000 \times 0.85 \times 0.80 \times 0.75$

$= 25,500$

Therefore, the value of machinery after 3 years is Rs. 25,500.

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A piece of machinery is bought for Rs. 50,000. In the first year, it depreciates by 15%, and in each subsequent year, the depreciation rate increases by 5% from the previous year. The value of machinery after 3 years will be:

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