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Standard VII
Mathematics
Interest
On the basis ...
Question

On the basis of the information given below, answer the following question.
NS.Ltd. purchased a lease- hold property on 1st April 2010 for 5 years at a cost of Rs 7,50,000. It is decided to write off the lease by annuity method presuming the rate of interest at 4 %.The annuity table shows that annual amount necessary to write - off Rs 1 in 5 years at 14 % is Rs 0.291284. Calculations to be made to the nearest rupee.
Interest for the year ended 31st March 2011 = ?

A
1,05,000
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B
71,007
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C
89,115
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D
None of the above
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Solution

The correct option is A 1,05,000
Depreciation under annuity method = value of machine x annuity value
= RS-7,50,000 x RS-0.291284
= RS-2,18,463
Interest on investment = Investment x rate of investment
= RS-7,50,000 x 14/100
= RS-1,05,000.

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