1.

An old building has been purchased by a person at a cost of Rs.30000/- excluding the cost of the land. Calculate the amount of annual sinking fund at 4% interest assuming the future lie of the building as 20 years and the scrap value of the building as 10% of the cost of purchase.(a) Rs.979.7(b) Rs.4387.20(c) Rs.107.20(d) Rs.907.20I had been asked this question in an interview for internship.This key question is from Values, Tax, Funds & Rents etc in section Valuation, Reports Technical and Design Data of Civil Engineering Drawing

Answer»

Correct OPTION is (d) Rs.907.20

To elaborate: The total AMOUNT of sinking fund to be ACCUMULATED at the end of 20 years.

S = 30000 * 90/100 = Rs.27000.00

Annual instalment of sinking fund.

I = Si / [(1+i)n-1] = 27000*0.04/(1+0.04)20-1 = 27000*0.0336 = Rs.907.20

Annual Instalment for sinking fund REQUIRED for 20 years = Rs.907.20.



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