Where

Now putting the expression of ‘ D 1 'from equation (3.8) in the above expression;

(3.9)

The depreciation in 2^nd year i.e. ‘ D₂' is calculated by multiplying the book value at the beginning of 2^nd year (i.e. book value at the end of 1^st year) with the depreciation rate ‘ d_m' and is given as follows;

(3.10)

Now putting the expression of ‘BV₁' from equation (3.9) in equation (3.10) results in the following;

(3.11)

Book value at the end of 2^nd year is equal to book value at the beginning of 2^nd year (i.e. book value at the end of 1^st year) less the depreciation in 2^nd year and is expressed as follows;

Now putting the expressions of ‘BV₁' and ‘D₂' from equation (3.9) and equation (3.11) respectively in above expression results in the following;

(3.12)

Similarly the depreciation in 3^rd year i.e. ‘D₃' is calculated as follows;

(3.13)

Now putting the expression of ‘BV₂' from equation (3.12) in equation (3.13);

(3.14)

Book value at the end of 3^rd year is calculated as follows;

(3.15)