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A tractor shovel has a purchase price of Rs. 4.7 lacs and could save the organization an amount of rupees one lac per year on operating costs. The salvage value after the amortization period is 10% of the purchase price. The capital recovery period will be

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Correct Answer: Option B
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3 Comments
Taniya Noor
Taniya Noor 5 years ago
Purchase price=Rs. 4,70,000
Salvage value=10% of Rs. 4,70,000=Rs.47,000
Net capital=Rs.4,70,000-Rs.47,000=Rs.4,23,000
Capital recovered=Rs 1,00,000 per year
Therefore, capital recovery period=(4,23,000/1,00,000)=4.23 years
Mir Nayeem
Mir Nayeem 6 years ago
10%of 470000=47000
470000-47000=423000
Therefore recovery period will be 4.23years
Mosaraf Hossain
Mosaraf Hossain 7 years ago
solution plz