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Consider the following statement

Net Investment = Rs. 5 Cr.

Gross Investment = Rs 7.73 Cr.

Find the value of Depreciation

Solution

✅ Correct Option: 2

Option 1 -> Incorrect calculation, does not match the difference between gross and net investment.

Option 2 -> Correct calculation: Depreciation = Gross Investment - Net Investment = 7.73 - 5 = 2.73 Cr.

Option 3 -> This appears to be the sum rather than the difference.

Option 4 -> Has incorrect negative sign.


Hence, Option 2: Rs 2.73 Cr -> The fundamental relationship is: Net Investment = Gross Investment - Depreciation. Rearranging this formula: Depreciation = Gross Investment - Net Investment = Rs 7.73 Cr - Rs 5 Cr = Rs 2.73 Cr. Depreciation represents the wear and tear or reduction in value of capital assets during the investment period. -> correct

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