Project ForgePlant Design & Economics
Profitability Analysis
GATE 2017
Easy
A new pump (installed) costs Rs.24,000, useful life 10 years, salvage Rs.4,000. Using straight-line depreciation, the book value at the end of year 4, rounded to nearest integer, is
16000 Rupees(± 50 accepted)
Explanation
Annual depreciation=(24000−4000)/10=2000/yr. Book value after 4 years=24000−4×2000=16,000 Rupees.
Source: GATE CH 2017 (2017)
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