A machine is depredated at a rate of 10% on reducing balance the original coast was RS. 10,000, after how many years it will be valued at Rs.6561
Question
A machine is depredated at a rate of 10% on reducing balance the original coast was RS. 10,000, after how many years it will be valued at Rs.6561
Solution
To find out how many years it will take for the machine to be valued at Rs. 6561, we need to use the reducing balance method.
First, let's calculate the depreciation rate. The machine is depreciated at a rate of 10% on reducing balance. This means that each year, the value of the machine will decrease by 10% of its current value.
Next, let's calculate the value of the machine after one year. We can do this by subtracting 10% of the original value from the original value.
Original value = Rs. 10,000 Depreciation rate = 10%
Value after one year = Original value - (Depreciation rate * Original value) Value after one year = 10,000 - (0.10 * 10,000) Value after one year = 10,000 - 1,000 Value after one year = Rs. 9,000
Now, let's continue this process until the value of the machine reaches Rs. 6561.
Value after two years = Value after one year - (Depreciation rate * Value after one year) Value after two years = 9,000 - (0.10 * 9,000) Value after two years = 9,000 - 900 Value after two years = Rs. 8,100
Value after three years = Value after two years - (Depreciation rate * Value after two years) Value after three years = 8,100 - (0.10 * 8,100) Value after three years = 8,100 - 810 Value after three years = Rs. 7,290
We can continue this process until we reach a value of Rs. 6561.
Value after four years = Rs. 6,561
Therefore, it will take four years for the machine to be valued at Rs. 6561.
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