If the rate of interest is 7%, then the annual installment

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Direction: A person has purchased an old building at a cost of Rs. 2,50,000/-, excluding the cost of land. The scrap value of the building is 10% of the cost of purchase and the future life of the building is 20 years.

If the rate of interest is 7%, then the annual installment of sinking fund will be

1. Rs. 4,583/-
2. Rs. 4,855/-
3. Rs. 5,507/-
4. Rs. 5,640/-

Correct Option: C

S =	S_n × R
	(1 + R)ⁿ - 1

= .0244 S_n
= .0244 x 225000 = 5490.