A small engineering business purchased a new welding machine - NSC Technical Mathematics - Question 5 - 2019 - Paper 1

To find the annual constant percentage rate of depreciation, we can use the formula:

$A = P(1 - r)^n$

Where:

• $A$ is the value at the end of the period (R1,000 after 5 years)
• $P$ is the initial value (R11,000)
• $r$ is the rate of depreciation
• $n$ is the number of years (5)

We can rearrange the formula to solve for $r$:

$r = 1 - \left( \frac{A}{P} \right)^{\frac{1}{n}}$

Now substituting the values: $r = 1 - \left( \frac{1000}{11000} \right)^{\frac{1}{5}}$

Calculating this: $r = 1 - 0.0904 \approx 0.10$

Thus, the annual constant percentage rate of depreciation is approximately 10%.