A piece of equipment cost a certain factory Rs 600,000. If it depreciated in value, 15% the first, 13.5% the next year, 12% the third year, and so on. What will be its value at the end of 10 years, all percentage applying to the original cost ?
The percentages of depreciation at the end of 1st,2nd,3rd years are 15%, 13.5%, 12%...., 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 10 years = 15% + 13.5% + 12% + ... + 1.5% = 82.5%
Hence, the value of equipment at the end of 10 years=100% - 82.5% = 17.5%.
The total cost at the end of 10 years = Rs. = Rs. 1,05,000.