A machine costs Rs. 20000 and its useful life is 8 years. The money is borrowed at 8% interest per annum. The capital recovery factor at 8% interest per annum for 8 years is 0.174. The annual equipment cost of the machine will be
A. Rs. 1740
B. Rs. 3480
C. Rs. 5220
D. Rs. 6960
Answer: Option B
Sinking fund factor is.174 for 8yrs at 8% per annum
Future value = 20000
So sinking fund to be set aside anually or the annual equipment cost = 20000×.174= 3480
20000*0.174= 3480
Ans:B
A(annual cost)=P(present worth)×capital recovery factor
A=20000×0.174
=3480 cost.
HOW?
Kaise ?