___________ of depreciation takes into account interest on capital outlay.

Sum of digit method

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Annuity method

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Depletion method

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Straight line method

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Solution

The correct option is B Annuity method
The annuity method of depreciation is also referred as the compound interest method of depreciation. If the cash flow of the asset being depreciated is constant over the life of the asset, then this method is called the annuity method. This method of depreciation takes into account interest on capital outlay.

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