GATE 2021 AR – Question 56
A property initially costs₹400000 and has 30 years future life. Scrap value is 10% of initial cost. At 5% interest, find the annual year-end sinking-fund deposit in rupees, to two decimals.
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Show answer and explanation
Correct answer: 5405.00 to 5422.00
Explanation
Amount to accumulate is 400000−40000=₹360000. For equal year-end deposits, A=Si/[(1+i)^n−1]. Substitute S=360000, i=0.05, n=30 to obtain A≈₹5418.52 per year. This is an ordinary-annuity deposit; beginning-of-year deposits would have an additional year of interest.