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An earth moving equipment costs rs 500000 and has an estimated life of 10 years and a salvage value of rs 50000. what uniform annual amount must be set aside at the end of each of the 10 years for replacement if the interest rate is 8% per annum and if the sinking fund factor at 8% per annum interest rate for 10 years is 0.069?
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An earth moving equipment costs rs 500000 and has an estimated life of...
To determine the uniform annual amount that must be set aside at the end of each of the 10 years for the replacement of the earth moving equipment, you can use the sinking fund formula:
Sinking Fund = (Cost - Salvage Value) * Sinking Fund Factor
Substituting the values you provided:
Sinking Fund = (500000 - 50000) * 0.069
Sinking Fund = 450000 * 0.069
Sinking Fund = 30930
This means that you must set aside 30930 at the end of each of the 10 years to have enough money to replace the earth moving equipment when it reaches the end of its estimated life.
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An earth moving equipment costs rs 500000 and has an estimated life of...
Calculation of Uniform Annual Amount for Replacement
Given information:
- Cost of earth moving equipment (C) = Rs 500,000
- Estimated life of equipment (n) = 10 years
- Salvage value (S) = Rs 50,000
- Interest rate (i) = 8% per annum
- Sinking fund factor (SF) = 0.069
Step 1: Calculate the Depreciation Amount
Depreciation is the reduction in value of an asset over time. It is calculated using the formula:
Depreciation (D) = (C - S) / n
Substituting the given values:
D = (500,000 - 50,000) / 10
D = Rs 45,000 per year
Step 2: Calculate the Annual Amount for Replacement
The annual amount for replacement is the sum of depreciation and interest on the sinking fund. It is calculated using the formula:
Annual Amount = D + (D * i)
Substituting the given values:
Annual Amount = 45,000 + (45,000 * 0.08)
Annual Amount = Rs 48,600
Step 3: Calculate the Uniform Annual Amount
The sinking fund factor is a multiplier used to calculate the uniform annual amount required for replacement. It is calculated using the formula:
Uniform Annual Amount = Annual Amount * SF
Substituting the given values:
Uniform Annual Amount = 48,600 * 0.069
Uniform Annual Amount = Rs 3,353.40
Therefore, a uniform annual amount of Rs 3,353.40 must be set aside at the end of each of the 10 years for replacement of the earth moving equipment.
Explanation:
- The cost of the earth moving equipment is Rs 500,000, and it has an estimated life of 10 years.
- The salvage value of the equipment is Rs 50,000, which is the estimated value of the equipment at the end of its useful life.
- The annual depreciation amount is calculated by dividing the difference between the cost and salvage value by the number of years of useful life.
- The sinking fund factor is a multiplier that takes into account the interest rate and number of years to calculate the uniform annual amount required for replacement.
- After calculating the annual depreciation amount and adding interest on the sinking fund, the annual amount for replacement is determined.
- Finally, by multiplying the annual amount for replacement with the sinking fund factor, the uniform annual amount required for replacement is obtained.
Given information:
- Cost of earth moving equipment (C) = Rs 500,000
- Estimated life of equipment (n) = 10 years
- Salvage value (S) = Rs 50,000
- Interest rate (i) = 8% per annum
- Sinking fund factor (SF) = 0.069
Step 1: Calculate the Depreciation Amount
Depreciation is the reduction in value of an asset over time. It is calculated using the formula:
Depreciation (D) = (C - S) / n
Substituting the given values:
D = (500,000 - 50,000) / 10
D = Rs 45,000 per year
Step 2: Calculate the Annual Amount for Replacement
The annual amount for replacement is the sum of depreciation and interest on the sinking fund. It is calculated using the formula:
Annual Amount = D + (D * i)
Substituting the given values:
Annual Amount = 45,000 + (45,000 * 0.08)
Annual Amount = Rs 48,600
Step 3: Calculate the Uniform Annual Amount
The sinking fund factor is a multiplier used to calculate the uniform annual amount required for replacement. It is calculated using the formula:
Uniform Annual Amount = Annual Amount * SF
Substituting the given values:
Uniform Annual Amount = 48,600 * 0.069
Uniform Annual Amount = Rs 3,353.40
Therefore, a uniform annual amount of Rs 3,353.40 must be set aside at the end of each of the 10 years for replacement of the earth moving equipment.
Explanation:
- The cost of the earth moving equipment is Rs 500,000, and it has an estimated life of 10 years.
- The salvage value of the equipment is Rs 50,000, which is the estimated value of the equipment at the end of its useful life.
- The annual depreciation amount is calculated by dividing the difference between the cost and salvage value by the number of years of useful life.
- The sinking fund factor is a multiplier that takes into account the interest rate and number of years to calculate the uniform annual amount required for replacement.
- After calculating the annual depreciation amount and adding interest on the sinking fund, the annual amount for replacement is determined.
- Finally, by multiplying the annual amount for replacement with the sinking fund factor, the uniform annual amount required for replacement is obtained.
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An earth moving equipment costs rs 500000 and has an estimated life of 10 years and a salvage value of rs 50000. what uniform annual amount must be set aside at the end of each of the 10 years for replacement if the interest rate is 8% per annum and if the sinking fund factor at 8% per annum interest rate for 10 years is 0.069?
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An earth moving equipment costs rs 500000 and has an estimated life of 10 years and a salvage value of rs 50000. what uniform annual amount must be set aside at the end of each of the 10 years for replacement if the interest rate is 8% per annum and if the sinking fund factor at 8% per annum interest rate for 10 years is 0.069? for Civil Engineering (CE) 2024 is part of Civil Engineering (CE) preparation. The Question and answers have been prepared according to the Civil Engineering (CE) exam syllabus. Information about An earth moving equipment costs rs 500000 and has an estimated life of 10 years and a salvage value of rs 50000. what uniform annual amount must be set aside at the end of each of the 10 years for replacement if the interest rate is 8% per annum and if the sinking fund factor at 8% per annum interest rate for 10 years is 0.069? covers all topics & solutions for Civil Engineering (CE) 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for An earth moving equipment costs rs 500000 and has an estimated life of 10 years and a salvage value of rs 50000. what uniform annual amount must be set aside at the end of each of the 10 years for replacement if the interest rate is 8% per annum and if the sinking fund factor at 8% per annum interest rate for 10 years is 0.069?.
An earth moving equipment costs rs 500000 and has an estimated life of 10 years and a salvage value of rs 50000. what uniform annual amount must be set aside at the end of each of the 10 years for replacement if the interest rate is 8% per annum and if the sinking fund factor at 8% per annum interest rate for 10 years is 0.069? for Civil Engineering (CE) 2024 is part of Civil Engineering (CE) preparation. The Question and answers have been prepared according to the Civil Engineering (CE) exam syllabus. Information about An earth moving equipment costs rs 500000 and has an estimated life of 10 years and a salvage value of rs 50000. what uniform annual amount must be set aside at the end of each of the 10 years for replacement if the interest rate is 8% per annum and if the sinking fund factor at 8% per annum interest rate for 10 years is 0.069? covers all topics & solutions for Civil Engineering (CE) 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for An earth moving equipment costs rs 500000 and has an estimated life of 10 years and a salvage value of rs 50000. what uniform annual amount must be set aside at the end of each of the 10 years for replacement if the interest rate is 8% per annum and if the sinking fund factor at 8% per annum interest rate for 10 years is 0.069?.
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