CA Foundation Exam  >  CA Foundation Questions  >  A machine costs 520000 with estimated life o... Start Learning for Free
A machine costs 520000 with estimated life of 25 tears a sinking fund is created to replace it by new model 25% m higher cost after 25 years with scrap value realization of 25000 what amount should set aside every year if sinking fund investments accumulate at 3.5% compound interest p.a?
Most Upvoted Answer
A machine costs 520000 with estimated life of 25 tears a sinking fund...
Solution:

Given:
- Cost of the machine = 520000
- Estimated life of the machine = 25 years
- New model cost = 25% higher than the current cost
- Scrap value realization = 25000
- Sinking fund investments accumulate at 3.5% compound interest p.a

To find:
- Amount to be set aside every year for the sinking fund

Explanation:

The sinking fund is created to replace the machine with a new model after 25 years. The new model cost is 25% higher than the current cost, which means the new model cost will be:

New model cost = 520000 + (25/100) * 520000
New model cost = 650000

The scrap value realization is given as 25000, which means the total amount required to replace the machine after 25 years will be:

Total amount required = New model cost - Scrap value realization
Total amount required = 650000 - 25000
Total amount required = 625000

This total amount required after 25 years should be accumulated through the sinking fund investments, which accumulate at 3.5% compound interest p.a.

Let x be the amount to be set aside every year for the sinking fund. Then the total amount accumulated after 25 years can be calculated as:

Total amount accumulated = x * (((1 + 0.035)^25 - 1) / 0.035)

This total amount accumulated should be equal to the total amount required after 25 years, i.e.,

Total amount accumulated = Total amount required
x * (((1 + 0.035)^25 - 1) / 0.035) = 625000

Solving for x, we get:

x = 625000 / (((1 + 0.035)^25 - 1) / 0.035)
x = 13115.75

Therefore, the amount to be set aside every year for the sinking fund is Rs. 13115.75.

Conclusion:

The amount to be set aside every year for the sinking fund is Rs. 13115.75.
Explore Courses for CA Foundation exam
A machine costs 520000 with estimated life of 25 tears a sinking fund is created to replace it by new model 25% m higher cost after 25 years with scrap value realization of 25000 what amount should set aside every year if sinking fund investments accumulate at 3.5% compound interest p.a?
Question Description
A machine costs 520000 with estimated life of 25 tears a sinking fund is created to replace it by new model 25% m higher cost after 25 years with scrap value realization of 25000 what amount should set aside every year if sinking fund investments accumulate at 3.5% compound interest p.a? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A machine costs 520000 with estimated life of 25 tears a sinking fund is created to replace it by new model 25% m higher cost after 25 years with scrap value realization of 25000 what amount should set aside every year if sinking fund investments accumulate at 3.5% compound interest p.a? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A machine costs 520000 with estimated life of 25 tears a sinking fund is created to replace it by new model 25% m higher cost after 25 years with scrap value realization of 25000 what amount should set aside every year if sinking fund investments accumulate at 3.5% compound interest p.a?.
Solutions for A machine costs 520000 with estimated life of 25 tears a sinking fund is created to replace it by new model 25% m higher cost after 25 years with scrap value realization of 25000 what amount should set aside every year if sinking fund investments accumulate at 3.5% compound interest p.a? in English & in Hindi are available as part of our courses for CA Foundation. Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of A machine costs 520000 with estimated life of 25 tears a sinking fund is created to replace it by new model 25% m higher cost after 25 years with scrap value realization of 25000 what amount should set aside every year if sinking fund investments accumulate at 3.5% compound interest p.a? defined & explained in the simplest way possible. Besides giving the explanation of A machine costs 520000 with estimated life of 25 tears a sinking fund is created to replace it by new model 25% m higher cost after 25 years with scrap value realization of 25000 what amount should set aside every year if sinking fund investments accumulate at 3.5% compound interest p.a?, a detailed solution for A machine costs 520000 with estimated life of 25 tears a sinking fund is created to replace it by new model 25% m higher cost after 25 years with scrap value realization of 25000 what amount should set aside every year if sinking fund investments accumulate at 3.5% compound interest p.a? has been provided alongside types of A machine costs 520000 with estimated life of 25 tears a sinking fund is created to replace it by new model 25% m higher cost after 25 years with scrap value realization of 25000 what amount should set aside every year if sinking fund investments accumulate at 3.5% compound interest p.a? theory, EduRev gives you an ample number of questions to practice A machine costs 520000 with estimated life of 25 tears a sinking fund is created to replace it by new model 25% m higher cost after 25 years with scrap value realization of 25000 what amount should set aside every year if sinking fund investments accumulate at 3.5% compound interest p.a? tests, examples and also practice CA Foundation tests.
Explore Courses for CA Foundation exam

Top Courses for CA Foundation

Explore Courses
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev