Example 1. The present value of a machine is Rs.20000/-. Workout the depreciation cost at the end of 5 years, if the salvage value is Rs.2000/-. Assume life of the machine be 16 years.

The percentage rate of annual depreciation for the constant percentage method,

$p= 1-{(\frac{Sc}{C})}^{1/n}$ = $1- (\frac{2000}{20000})^{1/16} = 1-0.8660 = 0.134$