Question

Rate of depreciation:
* Initial cost: 125000
* Cost after 2 years: 88200

Answer 1

To calculate the rate of depreciation, you can use the formula:

\[
\text{Depreciation Rate} = \frac{\text{Initial Cost} - \text{Cost after 2 years}}{\text{Initial Cost}} \times 100
\]

Plugging in the numbers:

- Initial Cost = 125,000
- Cost after 2 years = 88,200

First, calculate the total depreciation over the 2 years:

\[
\text{Total Depreciation} = 125,000 - 88,200 = 36,800
\]

Now, calculate the depreciation rate:

\[
\text{Depreciation Rate} = \frac{36,800}{125,000} \times 100
\]

Calculating this gives:

\[
\text{Depreciation Rate} = 0.2944 \times 100 \approx 29.44\%
\]

Next, divide the total depreciation by the number of years to find the annual depreciation rate:

\[
\text{Annual Depreciation Rate} = \frac{29.44\%}{2} \approx 14.72\%
\]

So, the total depreciation rate over the 2 years is approximately **29.44%**, and the average annual depreciation rate is approximately **14.72%**.