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EMI, CAGR & Depreciation · Question 65 of 66

What is the machine's rate of depreciation, as a percentage of its cost?

Question 65

MediumOriginal question

A factory buys a machine for ₹6,00,000. It is expected to last 8 years and then fetch ₹40,000 as scrap. The factory uses the straight-line method.

What is the machine's rate of depreciation, as a percentage of its cost?

Options for question 65

Show the answer and explanation
CorrectNot quiteAnswer B

Correct answer: B

Explanation

  1. Rate =70,0006,00,000×100= \frac{70{,}000}{6{,}00{,}000} \times 100.

  2. About 11.67% a year.

Worth noting

12.5% is 1008\frac{100}{8}, which writes the machine off to nothing.

Concept
The depreciation rate
Typical time
120 s
Your time
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The rule this testsLinear depreciation
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