Railways Technical Ability Metrology and Inspection Question Bank Metrology and Inspection

  • question_answer An equipment has been purchased for Rs. 120 and is estimated to have 10 years life and a scrap value of Rs. 20/- at the end of life. The book value of the equipment at the end of sixth year then the interest rate is 5% (using declining balance methods) will be:

    A) Rs. 40.95                      

    B) Rs.51.25

    C) 55.00               

    D) Rs. 59.25

    Correct Answer: D

    Solution :

    Rate of depreciation, \[p=1-{{\left( \frac{S}{C} \right)}^{\frac{1}{N}}}\] \[=1-{{\left( \frac{20}{120} \right)}^{\frac{1}{10}}}=0.164\] Book value of the end of 6 years \[=C(1-p)N=120\,\,(1-0.164)\,\times 6\] = Rs. 40.95

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