Statistics & Applications

Financial Math

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A machine costing Rs. 25000 has a useful life of 4 years. The estimated scrap value is Rs. 5000. The annual depreciation by linear method is

Rs. 6000

Rs. 5000

Rs. 5500

Rs. 4500

✅ Correct Option: 2

The machine costs Rs. 25,000 initially and has a scrap value of Rs. 5,000 after 4 years of useful life.

In the linear (straight-line) method of depreciation, the asset loses the same amount of value every year.

Total depreciation over the entire useful life:

Total Depreciation = Initial Cost - Scrap Value

Total Depreciation = 25,000 - 5,000

Total Depreciation = Rs. 20,000

The total depreciation is spread equally over the useful life of 4 years:

Annual Depreciation = $\dfrac{\text{Total Depreciation}}{\text{Useful Life}}$

Annual Depreciation = $\dfrac{20,000}{4}$

Annual Depreciation = Rs. 5,000

Alternatively, using the direct formula:

Annual Depreciation = $\dfrac{\text{Initial Cost - Scrap Value}}{\text{Useful Life}}$

Annual Depreciation = $\dfrac{25,000 - 5,000}{4}$

Annual Depreciation = $\dfrac{20,000}{4}$

Annual Depreciation = Rs. 5,000

Therefore, the annual depreciation by linear method is Rs. 5,000.

2026: 22 May Shift 2

At what rate of interest will the present value of a perpetuity of ₹10000 payable at the end of every six months be ₹200,000?

2025: 15 May Shift 2

A T.V. panel costing Rs 18000 has a useful life of 12 years. If the annual depreciation is Rs 1000, then its scrap value by linear method is:

2026: 30 May Shift 2

Scrap value of a machine is one-tenth of its actual cost. If the estimated life of the machine is ten years and the annual depreciation under linear method is ₹45000, then the cost of the machine is

2025: 2 June Shift 1

Maneesh took a loan of ₹ 9,00,800 from bank at an interest rate of 6% per annum for 10 years. If she has to pay the loan back with the help of equal monthly installments (EMI). Then, the EMI using reduced balance method is (approx):

[Given: $(1.005)^{-120}=0.5496$ ]

2026: 26 May Shift 2

Factors affecting the calculation of the annual depreciation of an asset are

A. Body shape of the asset

B. Original cost of the asset

C. Scrap value of the asset

D. Useful life of the asset

Choose the correct answer from the options given below:

2025: 14 May Shift 2

The present value of a sequence of payments of Rs. 2000 made at the end of every 6 months and continuing forever, if money is worth 8% per annum compounded semi-annually, is:

A machine costing Rs. 25000 has a useful life of 4 years. The estimated scrap value is Rs. 5000. The annual depreciation by linear method is

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