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Plant Design & Economics
Profitability Analysis
GATE 2009
Medium

A column costs Rs. 5.0 lakhs and has a useful life of 10 years. Using the double declining balance depreciation method, the book value of the unit at the end of five years (in lakhs of Rs.) is

  • A1.21
  • B1.31
  • 1.64
  • D2.05

Explanation

DDB rate=2/n=2/10=0.20. Book value after 5 years=5×(1−0.20)⁵=5×(0.8)⁵=5×0.32768≈1.64 lakhs.

Source: GATE CH 2009 (2009)

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