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A car costing ₹ 8,00,000 has scrap value of ₹ 3,00,000. If the book value of car at the end of fourth year is ₹ 6,00,000, then the useful life of the car is :

Solution

✅ Correct Option: 3

Annual depreciation =8,00,000−3,00,000N=5,00,000N= \frac{8,00,000 - 3,00,000}{N} = \frac{5,00,000}{N}.

Book value after 4 years: 8,00,000−4⋅5,00,000N=6,00,0008,00,000 - 4 \cdot \frac{5,00,000}{N} = 6,00,000.

20,00,000N=2,00,000⇒N=10\frac{20,00,000}{N} = 2,00,000 \Rightarrow N = 10 years.

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