A piece of machinery is bought for Rs. 50,000. In the first year, it depreciates by 15%, and in each subsequent year, the depreciation rate increases by 5% from the previous year. The value of machinery after 3 years will be:

Rs. 25,500

The correct answer is Option (3) → Rs. 25,500

Given:

Initial cost: $P = 50,000$

Depreciation rates:

Year 1: 15% → 0.15

Year 2: 15% + 5% = 20% → 0.20

Year 3: 20% + 5% = 25% → 0.25

Value after Year 1: $V_1 = P(1 - 0.15) = 50,000 \cdot 0.85 = 42,500$

Value after Year 2: $V_2 = V_1(1 - 0.20) = 42,500 \cdot 0.80 = 34,000$

Value after Year 3: $V_3 = V_2(1 - 0.25) = 34,000 \cdot 0.75 = 25,500$