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Multiple Choice Questions

A piece of equipment costs a certain factory INR 600 000 If it depreciates in value 15 in the first ...........

Quantitative Aptitude ( Phase -I) Percentage

A piece of equipment costs a certain factory INR 600,000. If it depreciates in value, 15% in the first year, 13.5 % in the next year, 12% in the third year, and so on, what will be its value at the end of the 10 years, all percentages applying to original cost?

2,00,000

1,05,000

4,05,000

6,50,000

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Explanation:

Let the cost of the equipment be Rs. 100.
Now, percentages of depreciation at the end of 1st, 2nd, 3rd years are 15, 13.5, 12,
respectively which are in A.P., with a = 15 and d = - 1.5.
Hence, percentage of depreciation in the tenth year = a + (10-1) d = 15 + 9 (-1.5) = 1.5
Also total value depreciated in the 10 years = 15 + 13.5 + 12 + ... + 1.5 = 82.5
Hence, value of equipment at end of 10 years=100 - 82.5 = 17.5.
The total cost being Rs. 6, 00,000/100 * 17.5 = Rs. 1, 05,000.

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