Question

the form of depre
ILLUSTRATION 1
The Directors of Matras Robber Factory Limited comeder a proposal to invest a suma
Rs 1,00.000 on a plant that has an expected life of 6 years at the end of which he
residual value
The expected annual incomes during the life of the plant are:
30,000
At the end of ll Year Rs.
Year Rs.
40,000
Year Rs.
40,000
IV
Year Rs. 20,000
Total Rs.
1,60,000
Money is available at an interest rate of 10% per annum, Calculate rate of return and
advise the directors of the company,​

Answer 1

Answer:

Given principle = Rs 20,000 and rate of interest = 8% and time = 3 years

Amount = p(1+r/100)^n

              = 20000 (1+8/100)³

⇒ 20000(27/25)³ =  20000*19683/15625 = 25194.24 Rs

Amonut = 25194.24 Rs

C.I = amonut - priciple

C.I = 25194.24 - 20000 = Rs 5194.24