f an experimental solar equipment depreciates for tax purposes at a rate of 10% every10 years. What is its depreciated value at the end of 20 years?
Question
f an experimental solar equipment depreciates for tax purposes at a rate of 10% every10 years. What is its depreciated value at the end of 20 years?
Solution
To calculate the depreciated value of the solar equipment after 20 years, we need to apply the depreciation rate twice over the initial value of the equipment.
Let's assume the initial value of the equipment is X.
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After the first 10 years, the value of the equipment will be X - (10% of X) = X - 0.10X = 0.90X.
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After the next 10 years, we apply the depreciation rate again, but this time to the depreciated value after the first 10 years. So, the value of the equipment will be 0.90X - (10% of 0.90X) = 0.90X - 0.09X = 0.81X.
So, the depreciated value of the equipment at the end of 20 years is 0.81X.
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