A machine costing Rs 50000 depreciates at a constant rate of 8% p.a. If the estimated useful life of the machine is 10 years, determine its scrap value (Use log table)
Answer & explanation
Correct answer: option 1
The correct answer is option (1) :₹21725
$P= ₹50000$
$i=\frac{8}{100}= 0.08$
$n= 10\, years $
So, $S= P(1-i)^n$
$= 50000(1-0.08)^{10}$
$= 50000(0.92)^{10}$
Let $ x= (0.92)^{10}$
$log\, x = 10log (0.92)$
$= 10×T.9638$
$= 10 ×(-0.0362)$
$= -0.362$
$= T.638$
x= antilog T.638
$= 0.4345$
$∴S= 50000×0.4345= 21725$
Hence, scrap value $= ₹21725$