The cost of a machine is Rs.32000.. Its value depreciates at the rate of 5% every year. Find the total depreciation in its value by the end of 2 years.

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Rs.3210

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Rs.5150

answer is A.

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Detailed Solution

Concept- The depreciation rate is provided in this question, making it simple to use depreciation to calculate the machine's depreciated cost at the end of each year. To determine the depreciation after two years, we will now reduce the machine's depreciated cost from its actual cost.
A machine is given a price tag of Rs. 32,000. Its depreciation rate is specified as 5%.
We can now determine the depreciated value at the conclusion of the first year using the depreciation rate.
At the end of the first year, the depreciated value is =32000

\times \frac{5}{100}

=1600.
So, Rs. 1600 is the depreciated value at the conclusion of the first year.
Currently, a machine costs Rs. 32000 + Rs. 1600 = Rs. 30400 after the first year.
We will now find the depreciated value for the subsequent year once more.
At the conclusion of the second year, the depreciated value is =30400

\times \frac{5}{100}

=1520.
So, Rs. 1520 is the depreciated value at the conclusion of the first year.
To find the entire depreciation of a machine's value after two years, we will now add the depreciated value to the cost of the machine.