• # question_answer An equipment has been purchased for Rs. 120 and is estimated to have 10 years life and a scrap value of Rs. 20/- at the end of life. The book value of the equipment at the end of sixth year then the interest rate is 5% (using declining balance methods) will be: A) Rs. 40.95                      B) Rs.51.25C) 55.00               D) Rs. 59.25

Rate of depreciation, $p=1-{{\left( \frac{S}{C} \right)}^{\frac{1}{N}}}$ $=1-{{\left( \frac{20}{120} \right)}^{\frac{1}{10}}}=0.164$ Book value of the end of 6 years $=C(1-p)N=120\,\,(1-0.164)\,\times 6$ = Rs. 40.95