______ method, the amount of depreciation is ascertained in such a way, that if invested every year with compound interest, it will yield an amount equal to the cost of asset.

Depletion unit method

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Annuity method

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Sinking fund method

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All of the above

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Solution

The correct option is C Sinking fund method
You can use a sinking fund to pay off a loan in one lump sum at the end of a set amount of time while making just interest payments in the meantime. ... The interest to the lender is based on an annual rate of 12%. Using the simple interest formula, I = Prt, you have I = 10,000(0.12)(1) = 1,200 per year.

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