Question

The cost of new machine will be $100000 after 12 years. In that time the old machine can be sold for $5000 as salvage value. What amount should be retained out of profits at the end of each year accumulate at C.I at 5% P.A?

Answer 1

To get the amount to be retained out of profits per year

=$\dfrac{cost . of asset- salvageValue}{time \space useful}$

= $\dfrac{100000- 50000}{12}$

=$\dfrac{95000}{12}$

=$ 7916.67