Question

A machinery is bought for Rs 4,95,000, erection charges Rs 5,000, scrap value after 9 years is Rs 60,000. Calculate the rate of depreciation?

(a) 7%
(b) 8%
(c) 9%
(d) 10%

Answer 1

To calculate the rate of depreciation, subtract the scrap value from the initial cost of the machinery and divide by the initial cost. Multiply the result by 100 to get the rate of depreciation.

Step-by-step explanation:

To calculate the rate of depreciation, we need to find the total depreciation amount and divide it by the initial cost of the machinery. To calculate the rate of depreciation, subtract the scrap value from the initial cost of the machinery and divide by the initial cost. Multiply the result by 100 to get the rate of depreciation.

The total depreciation amount can be calculated by subtracting the scrap value from the initial cost. So, the total depreciation amount is Rs 4,95,000 - Rs 60,000 = Rs 4,35,000. Now, we can calculate the rate of depreciation by dividing the total depreciation amount by the initial cost and multiplying by 100. The rate of depreciation is (4,35,000 / 4,95,000) * 100 = 87.88%. Therefore, the correct option is (c) 9%.