A reactor having a salvage value of Rs. 10000 is estimated to have a service life of 10 years. The annual interest rate is 10%. The original cost of the reactor was Rs. 80000. The book value of the reactor after 5 years using sinking fund depreciation method will be Rs _____________?

Question

Accepted Answer

60,196. The book value after 5 years is calculated by subtracting the accumulated depreciation from the original cost. The sinking fund method ensures that the remaining book value equals the salvage value plus the present worth of the future recovery.