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An asset is purchased for Rs. $50, 000$ on $1$ st January. The life of the machine is estimated to be $5$ years. It is decided to provide depreciation under annuity method by charging $5 %$ interest. The annual depreciation will be ____________.

A

R s . 13, 800

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B

R s . 14, 250

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C

R s . 11, 548

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D

R s . 13, 500

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Solution

The correct option is D $R s . 11, 548$
Annuity factor = 0.230975 (Taken from table)
The annual charge for depreciation reckoning interest at 5% p.a. would be 0.230975
the annual depreciation =Rs. 50,000 x 0.23975 =Rs. 11,548.75 i.e. Rs. 11,548

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