Example -2
Using the information provided in previous example, calculate the annual depreciation and book value of the construction equipment using sum-of-years-digits method and sinking fund method. The interest rate is 8% per year.
Solution:
P = Rs.3500000
SV = Rs.500000
n = 10 years
For sum-of-years-digits method, the depreciation amount for a given year is calculated using equation (3.24).
SOY = sum of years' digits over the useful life
Depreciation for 1st year 
Book value at the end of 1st year:
Depreciation for 2nd year 
Book value at the end of 2nd year:
Similarly the annual depreciation and book value at the end of other years for the construction equipment have been calculated and are presented in Table 3.2.
The book value at the end of different years can also be calculated by using equation (3.36). Using this equation, the book value at the end of 2nd year is calculated as follows;
For sinking fund method, the depreciation amount for a given year is calculated using equation (3.45).
The interest rate per year = i = 8%
Depreciation amount for 1 st year:
