Depreciation Calculation

To calculate the total depreciation of a car over a period of time, we need to consider the initial value of the car and the annual depreciation rate. In this case, the cost of the car is RS 250,000 and it depreciates at a rate of 2% per year.

Formula:
Total Depreciation = Initial Value * Depreciation Rate * Time

Calculating the Total Depreciation:

Step 1: Find the annual depreciation amount.
Annual Depreciation = Initial Value * Depreciation Rate
= RS 250,000 * 0.02
= RS 5,000

Step 2: Calculate the total depreciation over the given period.
Total Depreciation = Annual Depreciation * Time
= RS 5,000 * 3 (since we need to calculate for 3 years)
= RS 15,000

Therefore, the total depreciation of the car after 3 years in a corrosive climate would be RS 15,000.

Explanation:

Depreciation is the reduction in the value of an asset over time due to various factors such as wear and tear, age, obsolescence, and external conditions like climate. In this scenario, the car is subjected to a corrosive climate, which can accelerate the depreciation process.

The given depreciation rate of 2% per year means that the value of the car decreases by 2% of its initial value every year. To calculate the annual depreciation amount, we multiply the initial value of the car by the depreciation rate. In this case, the annual depreciation amount is RS 5,000.

To find the total depreciation over a specific period, we multiply the annual depreciation amount by the number of years. In this example, since we need to calculate the total depreciation after 3 years, we multiply the annual depreciation of RS 5,000 by 3, resulting in a total depreciation of RS 15,000.

This means that after 3 years in a corrosive climate, the value of the car would have decreased by RS 15,000 from its initial value of RS 250,000.

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